Indiabulls Housing Finance Limited And Ors vs Mantri Developers Private Limited

Ashutosh Chandra, Member (T)

I.A. No. 682 of 2019 is filed by Indiabulls Housing Finance Limited, the Intervening Applicant, in CP (IB) No. 350/BB/2019, filed by Aayas Trade Services Private Limited, the Petitioner/Operational Creditor, against Mantri Developers Private Limited, the Respondent under Section 9 of the Insolvency and Bankruptcy Code, 2016 seeking initiation of Corporate Insolvency Resolution Process wherein the Operational Creditor claims a default of Rs. 356,63,17,477/- (Rupees Three Hundred Fifty Six Crore Sixty Three Lakh Seventeen Thousand Four Hundred and Seventy Seven only) under various agreements entered between for development of certain properties in Varthur, Bengaluru.

The Impleading Applicant, Indiabulls Housing Finance Limited, has filed the instant application under Rule 11 of the National Company Law Tribunal Rules, 2016 read with section 60(5) of the Insolvency and Bankruptcy Code, 2016 seeking an order allowing the Applicant to intervene in CP (IB) No. 350/BB/2019 and place objections to the admission of the instant petition. It is further prayed that C.P. (IB) No. 350/BB/2019 be dismissed.

It is submitted that the Applicant being a Housing Finance Company engaged in the business of providing home loan facility, granted loan facilities to the Respondent / Corporate Debtor for development and construction of various residential housing projects. The said financial assistance was granted under 13 loan agreements entered from 28.09.2016 to 29.06.2019, wherein, the Respondent / Corporate Debtor was either a borrower or Corporate Guarantor. It is submitted that a sum of Rs. 1345,15,00,000/- (Rupees One Thousand Three Hundred Forty Five Crore Fifteen Lakh only) was extended to the Respondent and its group Companies, and out of the same, they have defaulted in payment of Rs. 1098,26,20,147/- (Rupees One Thousand Ninety Eight Crore Twenty Six Lakh Twenty Thousand One Hundred and Forty Seven only).

It is submitted by the Applicant that the money advanced to the Respondent is public money and the same would be jeopardised in case the petition is admitted for initiation of Corporate Insolvency Resolution Process. Further it is also submitted that the petition may not be allowed as thousands of Home Buyers who have invested their hard earned money for the purchase of the units/ flats in the residential project of the Respondent/ Corporate Debtor would face severe and irreparable loss.

It is submitted by the Applicant that the initiation of CIRP of the Respondent at the behest of an Operational Creditor involved in one out of the multiple projects of the Respondent will prejudice not only the development and completion of projects but will also jeopardise the interests of other stakeholders of the Respondent including the Applicant.

The Authorised Representative of the Operational Creditor/Petitioner in the instant petition filed counter affidavit dated 14.01.2020 stating that the impleading application is not maintainable under law. It is stated that no provision of law entitles any third party to file an application seeking intervention in the instant matter.

It is also stated that the it is possible for various corporate debtors to set up interveners one after the other to stretch the time in each matter thereby defeating the purpose of the law and frustrating the objects of the establishment of this Tribunal.

Heard Mr. Dhyan Chinnappa, learned Senior Counsel for the Impleading Applicant in I.A. No. 682 of 2019, Mr. Prasanth V.G, learned Counsel for the Operational Creditor and Mr. M.S. Shyamsundar, learned Senior Counsel for the Respondent. We have carefully perused the pleadings of the parties and extant provisions of the Code and the Rules made thereunder.

At the very outset, we make it clear that proceedings in a Petition filed under sections 7 or 9 of the IBC, 2016 strictly relate to the issue of debt and default between the Creditor and the Debtor. The Adjudicating Authority, under the Code, has to ascertain whether there is a default of financial / Operational Debt, above the prescribed amount, within the meaning assigned to these terms under the Code. Additionally, in case of an application under section 9 of IBC, 2016 pre-existence of a bona-fide dispute is to be ascertained. The Code does not envisage a situation where an intervener can be allowed in such ongoing proceedings between the Creditor and Debtor under Sec 7 or 9 of the Code, as its issue has no connection whatsoever with the particular debt and default under consideration in such ongoing proceedings. We, therefore, hold a clear view that no provision of law entitles any third party to file an application seeking intervention in the instant matter.

In view of the above, the intervening Applicant's claim of Rs. 1098,26,20,147/- (Rupees One Thousand Ninety Eight Crore Twenty Six Lakh Twenty Thousand One Hundred and Forty Seven only), if any, being independent and unconnected with the debt and default under consideration in CP (IB) No. 350/BB/2019 can be dealt with in a separate and valid application filed in accordance with the provisions of the Code, but not in this CP as prayed for. Alternatively, the said claim can be considered by the Resolution Professional, if on the fulfilment of the conditions laid down under section 9 of the IBC, 2016, and the attendant Rules, this Bench is satisfied that CIRP is to be initiated in respect of the Respondent/Corporate Debtor in the above CP. The Code, 2016 does not contemplate a third party's intrusion in an Application under section 9 of the Code.

In regard to the legal position stated above, reliance is placed on the decision of the Hon'ble National Company Law Appellate Tribunal in the case of M/s. Phoenix Arc Private Limited v. Shri Vishal M. Poonater & Anr in Company Appeal (AT) (Insolvency) No. 184 of 2019, wherein the Hon'ble NCLAT has held that an impleading Application cannot be allowed in an application under section 7 of the Code, 2016, as the impleading applicant has no role to play in the ongoing proceedings u/s 7 of the Code as initiated by a Creditor against a Debtor. The same principle applies to a proceeding under section 9 of the Code.

We also find no merit in the prayer of the Applicant that CP (IB) No. 350/BB/2019 may be dismissed. As mentioned above, the Impleading Applicant has no connection with the proceedings in progress in that CP and hence can have no bearing on our decision as to the admission or dismissal of the same. This plea also cannot be accepted, and is rejected.

in light of the above, we find no merit in the arguments of the Applicant seeking implements in C.P. (IB) No. 350/BB/2019 and the same is liable to be dismissed.

In the result, I.A No. 682 of 2019 filed in C.P. (IB) No. 350/BB/2019 is hereby dismissed. No order as to costs.