AMIT KATYALversusMEERA AHUJA AND OTHERS

                        [2022] 4 S.C.R. 389                             389


                          AMIT KATYAL                                   A
                                 v.
                 MEERA AHUJA AND OTHERS
                  (Civil Appeal No. 3778 of 2020)
                         MARCH 03, 2022                                 B

        [M. R. SHAH AND B. V. NAGARATHNA, JJ.]
       Insolvency and Bankruptcy Code, 2016: s.7 – Respondent
no. 4-corporate debtor came out with a housing project – However,
could not complete the project even after a period of eight years –     C
Respondent nos.1 to 3 (original applicants) who were the home
buyers preferred s.7 application before NCLT seeking initiation of
CIRP against Corporate Debtor – Original applicants sought refund
of an amount of Rs.6,93,02,755/- due to an inordinate delay in
completion of project and failure to handover possession within
the stipulated time – The said application was filed on 06.12.2018,     D
i.e., prior to the amendment to s.7 of the IBC, which now permits
100 or 10% of the home buyers/allottees to apply under s.7 of the
IBC – NCLT admitted s.7 application and appointed the Interim
Resolution Professional (IRP) and declared a moratorium –
Appellant challenged the order of admission of s.7 application before   E
the NCLAT – During the hearing before the NCLAT, the appellant
tried to settle the matter with the original applicants, however, the
settlement did not go through – By impugned order, NCLAT dismissed
the appeal and upheld the admission order and directed
commencement of CIRP – The IRP issued the public announcement
on 10.11.2020 and constituted the Committee of Creditors on             F
23.11.2020 – In the meantime, instant appeal filed – This Court,
while issuing notice, stayed the operation and implementation of
impugned order, subject to appellant depositing the amount of
Rs.2,75,55,186/- with interest in the Registry of this Court –
Appellant deposited an amount of Rs. 3,36,02,000/- with the Registry    G
– Three home buyers preferred IA No. 105732 of 2021 for
impleadment – When the present appeal was taken up for further
hearing on 04.02.2022, it was reported that the original applicants
as well as 79 other home buyers settled the dispute with the
Corporate Debtor whereby it was agreed that the corporate debtor
                                                                        H
                                389
390            SUPREME COURT REPORTS                       [2022] 4 S.C.R.


A     shall complete the entire project and hand over the possession to
      the home buyers (who want the possession), within a period of one
      year – It was also submitted on behalf of the original applicants
      that they have also settled the dispute with the corporate debtor
      and they had agreed to refund the amount of Rs.3,36,02,000/- with
      applicable/accrued interest to the original applicants – Therefore,
B
      it was requested to record the settlement and permit original
      applicants to withdraw CIRP proceedings pending before the NCLT
      – Pursuant to order dated 4.2.2022, the original applicants preferred
      IA No. 18679 of 2022 under Art.142 of the Constitution of India r/
      w rr.11 and 12 of the National Company Law Tribunal Rules, 2016,
C     praying for permitting original applicants to withdraw CIRP
      proceedings on their being paid a sum of Rs.3,36,02,000/- along
      with applicable interest, out of the amount deposited by the appellant
      in the Registry of this Court and also dismiss all matters pending
      between the appellant and original applicants and close the CIRP
      proceedings – Held: In the peculiar facts and circumstances of the
D
      case, where out of 128 home buyers, 82 home buyers will get the
      possession within a period of one year, as undertaken by the
      appellant and corporate debtor, coupled with the fact that original
      applicants have also settled the dispute with the appellant/corporate
      debtor, this is a fit case to exercise the powers under Art.142 of the
E     Constitution of India r/w r.11 of the NCLT rules, 2016 and to permit
      the original applicants to withdraw the CIRP proceedings – The
      same shall be in the larger interest of the home buyers who are
      waiting for the possession since more than eight years – Even the
      object and purpose of the IBC is not to kill the company and stop/
      stall the project, but to ensure that the business of the company
F
      runs as a going concern.
            Disposing of the matters, the Court
            HELD: 1. The original applicants (respondent Nos. 1 to 3)
      now have moved before this Court by way of an interlocutory
G     application No. 18679/2022, praying for permitting them to
      withdraw the CIRP proceedings initiated by them against
      respondent no.4 – Corporate Debtor by submitting, inter alia,
      that the appellant has agreed to pay to the original applicants
      Rs.3,36,02,000/- with applicable/accrued interest thereon and
      they do not propose to thereafter proceed further with the
H
          AMIT KATYAL v. MEERA AHUJA AND OTHERS                       391


insolvency proceedings. Similarly, 82 (79+3) home buyers out of       A
the total 128 home buyers, who are also represented before this
Court, have stated that they are satisfied with the undertaking
given by the appellant and respondent no.4 before this Court
recorded in the joint statement regarding the proposed settlement
plan dated 3.2.2022, under which the appellant and respondent
                                                                      B
No.4 (Corporate Debtor) have undertaken to complete the project
within a period of one year and to hand over the possession to
them. Thus, out of 128 home buyers of 176 units, 82 home buyers
+ three original applicants have agreed to the settlement and
agreed to withdraw the CIRP proceedings and/or have no
objection if the CIRP proceedings initiated by respondent Nos. 1      C
to 3 are permitted to be withdrawn. [Para 5.1][399-D-H]
      2. Immediately on constitution of COC, this Court has
stayed the impugned order. No further steps are taken by the
IRP/COC pursuant to the admission of the CIRP proceedings
except the IRP was appointed and the COC was constituted.             D
Under Section 12A of the IBC which has been inserted by the
Insolvency and Bankruptcy (Second Amendment) Act, 2018 with
retrospective effect from 06.06.2018, the Adjudicating Authority
may allow the withdrawal of application admitted under Section 7
or Section 9 or Section 10, on an application made by the applicant
with the approval of ninety per cent voting share of the COC, in      E
such manner as may be specified. [Para 6][399-H; 400-A-B]
      3. In the present case, although the COC was constituted
on 23.11.2020, there has been a stay of CIRP proceedings on
3.12.2020 (within ten days) and no proceedings have taken place
before the COC. The COC comprises 91 members, of which 70%            F
are the members of the Flat Buyers Association who are willing
for the CIRP proceedings being set aside, subject to the appellant
and the Corporate Debtor – company honouring its undertaking
given to this Court as per the settlement plan dated 3.2.2022.
[Para 8][401-A-B]                                                     G
      4. Therefore, in the peculiar facts and circumstances of the
case, where out of 128 home buyers, 82 home buyers will get the
possession within a period of one year, as undertaken by the

                                                                      H
392            SUPREME COURT REPORTS                      [2022] 4 S.C.R.


A     appellant and respondent No.4 – Corporate Debtor, coupled with
      the fact that original applicants have also settled the dispute with
      the appellant/Corporate Debtor, this is a fit case to exercise the
      powers under Article 142 of the Constitution of India read with
      Rule 11 of the NCLT rules, 2016 and to permit the original
      applicants to withdraw the CIRP proceedings. The same shall be
B
      in the larger interest of the home buyers who are waiting for the
      possession since more than eight years. [Para 9][401-B-D]
             5. If the original applicants and the majority of the home
      buyers are not permitted to close the CIRP proceedings, it would
      have a drastic consequence on the home buyers of real estate
C     project. If the CIRP proceedings are continued, there would be a
      moratorium under Section 14 of the IBC and there would be stay
      of all pending proceedings and which would bar institution of fresh
      proceedings against the builder, including proceedings by home
      buyers for compensation due to delayed possession or refund. If
D     the CIRP is successfully completed, the home buyers like all
      other creditors are subjected to the pay outs provided in the
      resolution plan approved by the COC. Most often, resolution
      plans provide for high percentage of haircuts in the claims, thereby
      significantly reducing the claims of creditors. Unlike other
      financial creditors like banks and financial institutions, the effect
E     of such haircuts in claims for refund or delayed possession may
      be harsh and unjust on homebuyers. On the other hand, if the
      CIRP fails, then the builder-company has to go into liquidation as
      per Section 33 of the IBC. The homebuyers being unsecured
      creditors of the builder company stand to lose all their monies
F     that are either hard earned and saved or borrowed at high rate of
      interest, for no fault of theirs. [Para 10][401-E-G]
            6. Even the legislative intent behind the amendments to
      the IBC is to secure, protect and balance the interests of all home
      buyers. The interest of home buyers is protected by restricting
G     their ability to initiate CIRP against the builder only if 100 or
      10% of the total allottees choose to do so, all the same conferring
      upon them the status of a financial creditors to enable them to
      participate in the COC in a representative capacity. Being alive


H
          AMIT KATYAL v. MEERA AHUJA AND OTHERS                       393


to the problem of a single home buyer derailing the entire project    A
by filing an insolvency application under Section 7 of the IBC,
the legislature has introduced the threshold of at least 100 home
buyers or 10% of the total home buyers of the same project to
jointly file an application under Section 7 of the IBC for
commencement of CIRP against the builder company. [Para
                                                                      B
11][402-A-C]
      7. In the present case, out of the total 128 home buyers of
176 units, 82 homebuyers are against the insolvency proceedings
and the original applicants have also settled their dispute with
the appellant and corporate debtor. Even the object and purpose
of the IBC is not to kill the company and stop/stall the project,     C
but to ensure that the business of the company runs as a going
concern. [Para 12][402-F-G]
       8. In view of the aforesaid facts and circumstances, more
particularly when the withdrawal of the CIRP proceedings
initiated by the original applicants is allowable by the NCLT in      D
exercise of its powers under Rule 11 of the NCLT rules, 2016
and in the peculiar facts and circumstances of the case, instead of
relegating the original applicants to approach the NCLT/
Adjudicating Authority by moving an application under Section
12A of the IBC, this is a fit case to exercise powers under Article   E
142 of the Constitution of India as the settlement arrived at
between the home buyers and the appellant and corporate debtor
shall be in the larger interest of the home buyers and under the
settlement and as undertaken by the appellant/corporate debtor,
out of 128 home buyers, 82 home buyers are likely to get
possession within a period of one year, for which they are waiting    F
since last more than eight years after they have invested their
hard earned money. This shall be in furtherance of the object and
purpose of IBC. [Para 13][402-G-H; 403-A-B]
      Swiss Ribbons Private Limited and Another v. Union of
      India and others (2019) 4 SCC 17 : [2019] 3 SCR 535;            G
      Kamal K. Singh v. Dinesh Gupta & Another (Civil
      Appeal No. 4993 of 2021, decided on 25.08.2021;
      Brilliant Alloys Pvt. Ltd. v. S. Rajagopal 2018 SCC
      Online SC 3154 – referred to.
                                                                      H
394            SUPREME COURT REPORTS                        [2022] 4 S.C.R.


A                            Case Law Reference
      [2019] 3 SCR 535                referred to                Para 4.2
            CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3778
      of 2020.
B           From the Judgment and Order dated 09.11.2020 of the National
      Company Law Appellate Tribunal, New Delhi in COMP. APPEAL (AT)
      (INS) No.1380 of 2019.
            With

C           I.A. No.105732 of 2021 and I.A. No.18679 of 2022.
           Adit S. Pujari, Ms. Sheena Taqui, Shiv Vinayak Gupta, Dhvanit
      Chopra, Ms. Akansha Saini, Mrs. Bina Gupta, Advs. for the Appellant.
            K. V. Viswanathan, Nakul Diwan, Sr. Advs., Lokesh Bhola, Archit
      Upadhyay, Ms. Bhargavi Kannan, Ms. Pracheta Kar, Amartya Sharan,
D     Rahul Sangwan, Siddhant Buxy, Ms. Radhika Gupta, Hrishikesh Baruah,
      Shyam D. Nandan, M/s Dharmaprabhas Law Associates, Randhir Kumar
      Ojha, Yogesh Mittal, Amarjeet Singh, Advs. for the Respondents.
            The Judgment of the Court was delivered by

E           M. R. SHAH, J.
             1. Interlocutory Application No. 105732/2021 (for impleadment)
      is allowed in terms of the prayer made and they are ordered to be
      impleaded as respondents in the instant appeal.
            1A. Feeling aggrieved and dissatisfied with the impugned judgment
F     and order dated 09.11.2020 passed by the National Company Law
      Appellate Tribunal, New Delhi (hereinafter referred to as the ‘NCLAT/
      Appellate Authority’) in Company Appeal (AT) (Insolvency) No. 1380
      of 2019, by which the Appellate Authority has dismissed the said appeal
      preferred by the appellant herein – Promoter/Majority Shareholder of
G     the Corporate Debtor – Jasmine Buildmart Pvt. Ltd. and has confirmed
      the order passed by the National Company Law Tribunal, New Delhi
      (hereinafter referred to as the ‘NCLT/Adjudicating Authority’) in
      admitting the petition under Section 7 of the Insolvency and Bankruptcy
      Code, 2016 (for short, ‘IBC’), the appellant – Promoter/Majority
      Shareholder of the Corporate Debtor has preferred the present appeal.
H
           AMIT KATYAL v. MEERA AHUJA AND OTHERS                               395
                       [M. R. SHAH, J.]

        2. That respondent no. 4 herein – Corporate Debtor – Jasmine           A
Buildmart Pvt. Ltd. had come out with a Gurgaon based housing project,
namely, Krrish Provence Estate (hereinafter referred to as the ‘Project’).
That respondent no.4 herein – Corporate Debtor could not complete the
project even after a period of eight years. Therefore, respondent nos. 1
to 3 herein (hereinafter referred to as the ‘original applicants’) who
                                                                               B
were the home buyers preferred Section 7 application before the
Adjudicating Authority/NCLT, Delhi being CP No. 1722/ND/2018 seeking
initiation of CIRP against respondent no. 4 – Corporate Debtor. That the
original applicants sought refund of an amount of Rs.6,93,02,755/- due
to an inordinate delay in the completion of the project and failure to
handover possession within the stipulated time. The said application was       C
filed on 06.12.2018, i.e., prior to the amendment to Section 7 of the IBC,
which now permits 100 or 10% of the home buyers/allottees to apply
under Section 7 of the IBC.
      2.1 That the NCLT/Adjudicating Authority admitted Section 7
application on 28.11.2019 and appointed the Interim Resolution                 D
Professional (for short, ‘IRP’) and declared a moratorium. That the
appellant herein challenged the order of admission of Section 7 application
before the NCLAT/Appellate Authority being CA (AT) (Insolvency) 1380
of 2019. It appears that during the hearing before the NCLAT/Appellate
Authority, the appellant herein tried to settle the matter with the original
applicants, however, the settlement did not go through. That by the            E
impugned judgment and order, the NCLAT has dismissed the said appeal
and has upheld the admission order and directed commencement of CIRP.
       2.2 The IRP issued the public announcement on 10.11.2020 and
constituted the Committee of Creditors (for short, ‘COC’) on 23.11.2020.
In the meantime, the appellant preferred the present appeal. By order          F
dated 03.12.2020, this Court, while issuing notice in the appeal, stayed
the operation and implementation of the impugned order, subject to the
appellant depositing the amount of Rs.2,75,55,186/- plus interest at the
rate of 6% per annum in the Registry of this Court within two weeks
from that date. It is reported that the appellant had deposited an amount      G
of Rs. 3,36,02,000/- on 17.12.2020 with the Registry of this Court, which
has been invested in a Fixed Deposit Receipt, which is to mature on
9.3.2022.
      2.3 Krrish Provence Flat Buyers Association had filed a caveat
before this Court apprehending that if any order is passed in the present      H
396            SUPREME COURT REPORTS                           [2022] 4 S.C.R.


A     proceedings, it may affect them as home buyers. Three other home
      buyers, namely, Sanjiv Puri, Akshat Seth and Kaustav Mukherjee have
      preferred IA No. 105732 of 2021 for impleadment.
            2.4 The present appeal was adjourned from time to time on the
      ground that the dispute between the appellant and respondent Nos. 1 to
B     3 herein (original applicants) is being settled and that the appellant/
      Corporate Debtor is prepared to complete the project within a period of
      nine months, if the home buyers make payments, as scheduled.
             2.5 When the present appeal was taken up for further hearing on
      04.02.2022, it was reported by the learned Senior Advocates/counsel
C     for the respective parties including the impleaders and the Association
      that the original applicants/respondent Nos. 1 to 3 herein as well as 79
      other home buyers have settled the dispute with the Corporate Debtor
      and a settlement has been entered into, under which, it is agreed that the
      Corporate Debtor shall complete the entire project and hand over the
      possession to the home buyers (who want the possession), within a period
D
      of one year. It was also submitted on behalf of the original applicants
      that they have also settled the dispute with the appellant/Corporate Debtor
      and the appellant had agreed to refund the amount of Rs.3,36,02,000/-
      with applicable/accrued interest to the original applicants. Therefore, it
      was requested to record the settlement and permit the original applicants
E     to withdraw CIRP proceedings pending before the NCLT/Adjudicating
      Authority. This Court passed the following order on 04.02.2022:
            “IA Nos. 131763/2020 and 130570/2021 stand disposed of with
            liberty in favour of the applicant(s) to avail any other remedy
            which may be available to them, as permissible under the law to
F           protect their rights.
            It is reported that out of 128 home buyers of 176 units, 79 + 3 (i.e.
            82) home buyers have settled the dispute with the corporate debtor
            including the original applicants/respondent nos. 1 to 3 herein who
            have initiated the IBC proceedings. It is reported that the original
G           applicants/respondent nos.1 to 3 herein as well as 79 home buyers
            have settled the dispute with the corporate debtor and a settlement
            has been entered into under which it is agreed that the corporate
            debtor shall complete the entire project and hand over the
            possession to the home buyers (who wants the possession) within
            a period of one year from today.
H
           AMIT KATYAL v. MEERA AHUJA AND OTHERS                               397
                       [M. R. SHAH, J.]

      In that view of the matter, it is requested to dispose of the matter.    A
      As the respondent nos. 1 to 3 want to withdraw the original
      proceedings in view of the settlement and in the peculiar facts
      and circumstances of the case and considering the fact that the
      order passed by the NCLT has been stayed by this Court pursuant
      to the earlier interim order dated 3.12.2020 and the corporate
                                                                               B
      debtor has deposited the entire amount as directed by this Court
      which is lying with the Registry and considering the provisions of
      Section 12-A of the IBC read with Section 2 (11), let the respondent
      nos.1 to 3 herein/original applicants before the NCLT who has
      initiated the proceedings under Section 7, file an application for
      withdrawal of the proceedings.                                           C
      Put up on 16.02.2022.”
       2.6 Pursuant to order dated 4.2.2022, the original applicants have
preferred IA No. 18679 of 2022 under Article 142 of the Constitution of
India read with Rules 11 and 12 of the National Company Law Tribunal
Rules, 2016, praying for permitting the original applicants to withdraw        D
CIRP proceedings on their being paid a sum of Rs.3,36,02,000/- along
with applicable interest, out of the amount deposited by the appellant in
the Registry of this Court. It is also further prayed to dismiss all matters
pending between the appellant and respondent Nos. 1 to 3 herein (original
applicants) mentioned in paragraph 7 of IA No. 18679 of 2022 and close         E
the CIRP proceedings of respondent No. 4 – Corporate Debtor initiated
by respondent Nos. 1 to 3 herein (original applicants).
       3. Shri Kapil Sibbal, learned Senior Advocate has appeared on
behalf of the appellant, Shri Lokesh Bhola, learned Advocate has appeared
on behalf of respondent Nos. 1 to 3 herein, Shri K.V. Vishwanathan,
learned Senior Advocate has appeared on behalf of the three impleaders         F
(IA No. 105732/2021), Shri Nakul Diwan, learned Senior Advocate has
appeared on behalf of the Krrish Provence Flat Buyers Association, Mr.
Yogesh Mittal, learned Advocate has appeared on behalf of the
Resolution Professional and Ms. Radhika Gupta, learned Advocate has
appeared on behalf of the intervenors.                                         G
       3.1 Shri K.V. Vishwanathan and Shri Nakul Diwan, learned Senior
Advocates appearing on behalf of the three impleaders – respective
home buyers and the Association and Shri Kapil Sibal, learned Senior
Advocate appearing on behalf of the appellant have jointly submitted
that a majority of the home buyers and the appellant and Corporate             H
398            SUPREME COURT REPORTS                          [2022] 4 S.C.R.


A     Debtor have settled the disputes and a joint statement regarding proposed
      settlement plan signed by the respective parties is filed under which, the
      appellant and respondent No.4 (Corporate Debtor) have undertaken that
      they shall complete the entire project within one year from the date of
      settlement and offer possession of the flats to the home buyers. Under
      the said agreement, the appellant and respondent No.4 (Corporate Debtor)
B
      have undertaken before this Court as under:
            “That the appellant and respondent No.4 (Company) shall
            undertake before the Hon’ble Court the following: -
                1.    Complete the entire project within 1 year from the date
C                     of settlement and offer the possession to the Homebuyers.
                2.    Complete the entire project including all the apartments,
                      common areas, amenities, etc. as specified in the ABA.
                3.    All demands be raised and timely paid, strictly in terms
                      of ABA.
D
                4.    Company commits to continue the provisions of all
                      maintenance services as per the ABA.
                5.    Company will make the application for obtaining
                      Occupancy Certificate within 6 months, before the
                      Competent Authority.
E
             4. Learned counsel on behalf of the respective parties have
      reported that out of the total 128 home buyers of 176 units, 79 + 3 home
      buyers have settled the dispute with the Corporate Debtor and have
      accepted the joint statement regarding proposed settlement plan dated
      3.2.2022 and have agreed to the proposal/undertaking by the appellant
F
      and the Corporate Debtor that they shall complete the project and hand
      over the possession to the home buyers within a period of one year.
      Learned counsel appearing on behalf of the respective parties therefore
      have prayed to exercise the powers under Article 142 of the Constitution
      of India read with Rules 11 and 12 of the National Company Law Tribunal
G     Rules, 2016 and permit the original applicants to withdraw the CIRP
      proceedings which shall be in the larger interest of the majority of the
      home buyers who want the possession and under the settlement they
      will get now the possession after waiting for eight to nine years.
            4.1 Learned counsel appearing on behalf of the respective parties
H     have also submitted that after the COC was constituted on 23.11.2020
           AMIT KATYAL v. MEERA AHUJA AND OTHERS                             399
                       [M. R. SHAH, J.]

by the IRP, no further steps are taken either by the IRP and/or even the     A
COC and even the first meeting of the COC has also not been convened
and before any further CIRP proceedings are proceeded, this Hon’ble
Court has stayed the impugned order. It is submitted therefore that there
shall not be any impediment in permitting the original applicants to
withdraw the CIRP proceedings.
                                                                             B
       4.2 Learned counsel for the respective parties have heavily relied
upon paras 82 to 87 of the decision of this Court in the case of Swiss
Ribbons Private Limited and Another v. Union of India and others,
reported in (2019) 4 SCC 17 and one another order passed by this
Court in the case of Kamal K. Singh v. Dinesh Gupta & Another
(Civil Appeal No. 4993 of 2021, decided on 25.08.2021), in which             C
this Court has permitted the original applicants before the Adjudicating
Authority to withdraw the CIRP proceedings in view of the settlement
entered into between the parties.
       5. We have heard learned counsel for the respective parties at
length.                                                                      D

       5.1 The original applicants (respondent Nos. 1 to 3 herein) now
have moved before this Court by way of an interlocutory application
No. 18679/2022, praying for permitting them to withdraw the CIRP
proceedings initiated by them against respondent no.4 – Corporate Debtor
by submitting, inter alia, that the appellant has agreed to pay to the       E
original applicants Rs.3,36,02,000/- with applicable/accrued interest
thereon and they do not propose to thereafter proceed further with the
insolvency proceedings. Similarly, 82 (79+3) home buyers out of the
total 128 home buyers, who are also represented before this Court, have
stated that they are satisfied with the undertaking given by the appellant   F
and respondent no.4 before this Court recorded in the joint statement
regarding the proposed settlement plan dated 3.2.2022, under which the
appellant and respondent No.4 (Corporate Debtor) have undertaken to
complete the project within a period of one year and to hand over the
possession to them. Thus, out of 128 home buyers of 176 units, 82 home
buyers + three original applicants have agreed to the settlement and         G
agreed to withdraw the CIRP proceedings and/or have no objection if
the CIRP proceedings initiated by respondent Nos. 1 to 3 herein are
permitted to be withdrawn.
      6. As observed hereinabove, immediately on constitution of COC,
this Court has stayed the impugned order. No further steps are taken by      H
400             SUPREME COURT REPORTS                           [2022] 4 S.C.R.


A     the IRP/COC pursuant to the admission of the CIRP proceedings except
      the IRP was appointed and the COC was constituted. Under Section
      12A of the IBC which has been inserted by the Insolvency and Bankruptcy
      (Second Amendment) Act, 2018 with retrospective effect from
      06.06.2018, the Adjudicating Authority may allow the withdrawal of
      application admitted under Section 7 or Section 9 or Section 10, on an
B
      application made by the applicant with the approval of ninety per cent
      voting share of the COC, in such manner as may be specified. The
      rationale behind the insertion of Section 12A is contained in the Insolvency
      Law Commission Report, which is as under:
            “29.1 Under Rule 8 of the CIRP Rules, NCLT may permit
C
            withdrawal of the application on a request by the applicant before
            its admission. However, there is no provision in the Code or the
            CIRP Rules in relation to permissibility of withdrawal post
            admission of a CIRP application. It was observed by the
            Committee that there have been instances where on account of
D           settlement between the applicant creditor and the corporate debtor,
            judicial permission for withdrawal of CIRP was granted. [….]
            Thus, it was agreed that once CIRP is initiated, it is no longer a
            proceeding only between the applicant creditor and the corporate
            debtor but is envisaged to be a proceeding involving all creditors
            of the debtor. The intent of the Code is to discourage individual
E
            actions for enforcement and settlement to the exclusion of the
            general benefit of all creditors.”
             7. It is true that the procedure for preferring an application under
      Section 12A of the IBC is contained in Regulation 30A of the CIRP
      Regulations, 2016. However, as per the decision of this Court in the
F
      case of Brilliant Alloys Pvt. Ltd. v. S. Rajagopal, 2018 SCC Online
      SC 3154, the said provision is held to be directory, depending on the
      facts of each case.
             7.1 In the case of Swiss Ribbons Pvt. Ltd. (supra), it is held that
      at any stage before a COC is constituted, a party can approach NCLT/
G
      Adjudicating Authority directly and the Tribunal may in exercise of its
      powers under Rule 11 of the NCLT Rules, allow or disallow an application
      for withdrawal or settlement. Therefore, in an appropriate case and where
      the case is being made out and the NCLT is satisfied about the settlement,
      may permit/allow an application for withdrawal or settlement.
H
           AMIT KATYAL v. MEERA AHUJA AND OTHERS                               401
                       [M. R. SHAH, J.]

       8. In the present case, as observed hereinabove, although the           A
COC was constituted on 23.11.2020, there has been a stay of CIRP
proceedings on 3.12.2020 (within ten days) and no proceedings have
taken place before the COC. It is to be noted that the COC comprises 91
members, of which 70% are the members of the Flat Buyers Association
who are willing for the CIRP proceedings being set aside, subject to the
                                                                               B
appellant and the Corporate Debtor – company honouring its undertaking
given to this Court as per the settlement plan dated 3.2.2022.
       9. Therefore, in the peculiar facts and circumstances of the case,
where out of 128 home buyers, 82 home buyers will get the possession
within a period of one year, as undertaken by the appellant and respondent
No.4 – Corporate Debtor, coupled with the fact that original applicants        C
have also settled the dispute with the appellant/Corporate Debtor, we
are of the opinion that this is a fit case to exercise the powers under
Article 142 of the Constitution of India read with Rule 11 of the NCLT
rules, 2016 and to permit the original applicants to withdraw the CIRP
proceedings. We are of the opinion that the same shall be in the larger        D
interest of the home buyers who are waiting for the possession since
more than eight years.
       10. If the original applicants and the majority of the home buyers
are not permitted to close the CIRP proceedings, it would have a drastic
consequence on the home buyers of real estate project. If the CIRP             E
proceedings are continued, there would be a moratorium under Section
14 of the IBC and there would be stay of all pending proceedings and
which would bar institution of fresh proceedings against the builder,
including proceedings by home buyers for compensation due to delayed
possession or refund. If the CIRP is successfully completed, the home
buyers like all other creditors are subjected to the pay outs provided in      F
the resolution plan approved by the COC. Most often, resolution plans
provide for high percentage of haircuts in the claims, thereby significantly
reducing the claims of creditors. Unlike other financial creditors like
banks and financial institutions, the effect of such haircuts in claims for
refund or delayed possession may be harsh and unjust on homebuyers.            G
       On the other hand, if the CIRP fails, then the builder-company
has to go into liquidation as per Section 33 of the IBC. The homebuyers
being unsecured creditors of the builder company stand to lose all their
monies that are either hard earned and saved or borrowed at high rate
of interest, for no fault of theirs.                                           H
402             SUPREME COURT REPORTS                            [2022] 4 S.C.R.


A            11. Even the legislative intent behind the amendments to the IBC
      is to secure, protect and balance the interests of all home buyers. The
      interest of home buyers is protected by restricting their ability to initiate
      CIRP against the builder only if 100 or 10% of the total allottees choose
      to do so, all the same conferring upon them the status of a financial
      creditors to enable them to participate in the COC in a representative
B
      capacity. Being alive to the problem of a single home buyer derailing the
      entire project by filing an insolvency application under Section 7 of the
      IBC, the legislature has introduced the threshold of at least 100 home
      buyers or 10% of the total home buyers of the same project to jointly file
      an application under Section 7 of the IBC for commencement of CIRP
C     against the builder company. The Insolvency Bankruptcy Code (Second
      Amendment) Bill, 2019 that proposed the amendment to Section 7
      contained a statement of object and reasons, inter alia, stated as follows:
            “2. A need was felt to give the highest priority in repayment to last
            mile funding to corporate debtors to prevent insolvency, in case
D           the company goes into corporate insolvency resolution process or
            liquidation, to prevent potential abuse of the Code by certain classes
            of financial creditors, to provide immunity against prosecution of
            the corporate debtor and action against the property of the
            corporate debtor and the successful resolution applicant subject
            to fulfilment of certain conditions, and in order to fill the critical
E           gaps in the corporate insolvency framework. It has become
            necessary to amend certain provisions of the Insolvency and
            Bankruptcy Code, 2016.”
             12. In the present case, as observed hereinabove, out of the total
      128 home buyers of 176 units, 82 homebuyers are against the insolvency
F     proceedings and the original applicants have also settled their dispute
      with the appellant and corporate debtor. Even the object and purpose of
      the IBC is not to kill the company and stop/stall the project, but to ensure
      that the business of the company runs as a going concern.
             13. In view of the aforesaid facts and circumstances, more
G     particularly when the withdrawal of the CIRP proceedings initiated by
      the original applicants is allowable by the NCLT in exercise of its powers
      under Rule 11 of the NCLT rules, 2016 and in the peculiar facts and
      circumstances of the case, instead of relegating the original applicants
      to approach the NCLT/Adjudicating Authority by moving an application
H     under Section 12A of the IBC, we are of the opinion that this is a fit case
           AMIT KATYAL v. MEERA AHUJA AND OTHERS                              403
                       [M. R. SHAH, J.]

to exercise powers under Article 142 of the Constitution of India as the      A
settlement arrived at between the home buyers and the appellant and
corporate debtor – company shall be in the larger interest of the home
buyers and under the settlement and as undertaken by the appellant/
corporate debtor, out of 128 home buyers, 82 home buyers are likely to
get possession within a period of one year, for which they are waiting
                                                                              B
since last more than eight years after they have invested their hard earned
money. This shall be in furtherance of the object and purpose of IBC.
       14. In view of the above and for the reasons stated above, IA No.
18679/2022 in Civil Appeal No. 3778/2020 filed by respondent Nos. 1 to
3 herein (original applicants before the NCLT/Adjudicating Authority) is
allowed.                                                                      C

        As agreed, respondent Nos. 1 to 3 shall be paid an amount of
Rs.3,36,02,000/- along with accrued interest, out of the amount deposited
by the appellant, pursuant to the earlier order passed by this Court dated
3.12.2020. Respondent Nos. 1 to 3 herein (original applicants before the
Adjudicating Authority) are permitted to withdraw the application filed       D
by them under Section 7 of the IBC, 2016 bearing CP No. 1722/ND/
2018 pending before the NCLT, New Delhi. Hence, CP No. 1722/ND/
2018 pending before the NCLT, New Delhi stands dismissed as
withdrawn. Consequently, all the orders passed by the NCLT, New Delhi,
including appointment of IRP and constitution of COC are hereby quashed       E
and set aside. Consequently, the impugned judgment and order passed
by the NCLAT also stands quashed and set aside. As agreed between
respondent Nos. 1 to 3 herein, the appellant and the corporate debtor,
Consumer Case bearing CC No. 984 of 2019, filed by respondent Nos.
1 to 3 herein, which is pending before the National Consumer Disputes
Redressal Commission, New Delhi and Criminal Complaint being Case             F
No. 540/2021 filed by respondent Nos. 1 to 3 herein, pending before the
learned Chief Metropolitan Magistrate, SED, New Delhi are hereby
dismissed as withdrawn/quashed. Either of the parties to place a copy
of the present order before the National Consumer Disputes Redressal
Commission, New Delhi and in the Court of Chief Metropolitan                  G
Magistrate, SED, New Delhi to complete the record of the Courts.
      15. The joint statement regarding the settlement plan dated
27.01.2022/03.02.2022 along with the list of the members of the Krrish
Provence Flat Buyers Association who have accepted and agreed to
take possession of the respective apartments, signed by the appellant,        H
404                SUPREME COURT REPORTS                         [2022] 4 S.C.R.


A     impleaders Akshat Seth, Sanjiv Puri & Kaustav Mukherjee and the office
      bearers of the Krrish Provence Flat Buyers Association are directed to
      be taken on record. It is directed that if the original of the joint statement
      regarding the settlement plan dated 27.01.2022/3.2.2022 signed by the
      respective parties and their advocates is not placed on record, the same
      be placed on record of the present proceedings, within a period of one
B
      week from today. The appellant herein and respondent No.4 – Jasmine
      Buildmart Pvt. Ltd. are directed to file separate undertakings before this
      Court, within a period of one week from today, specifically stating and
      undertaking that:
             (1)     they shall complete the entire project within one year from
C                    01.03.2022 and offer the possession to the respective home
                     buyers;
             (2)     they shall complete the entire project including all the
                     apartments, common areas, amenities, etc. as specified in
                     the ABA;
D
             (3)     all demands be raised and timely paid, strictly in terms of
                     ABA;
             (4)     Company shall continue the provisions of all maintenance
                     services as per the ABA; and
E            (5)     Company will make the application for obtaining
                     Occupancy Certificate within six months, before the
                     competent authority.
             The aforesaid undertakings shall be backed by the Resolution of
      the Company, which shall also be placed on record along with the
F     undertakings.
            15.1. The appellant and respondent No.4 – Jasmine Buildmart
      Pvt. Ltd. shall abide by the settlement plan recorded hereinabove and
      the undertakings to be filed within a period of one week from today. Any
      breach on the part of the appellant and respondent No.4 – Jasmine
G     Buildmart Pvt. Ltd. shall be viewed very seriously. Liberty is reserved in
      favour of the home buyers and the Krrish Provence Flat Buyers
      Association to approach this Court, in case of any difficulty.
             16. To do the complete justice in the matter and considering the
      fact that after the admission of the CIRP proceedings, IRP was appointed
H     and COC was constituted by the IRP and it is reported by the IRP that
                AMIT KATYAL v. MEERA AHUJA AND OTHERS                           405
                            [M. R. SHAH, J.]

he had incurred some expenditure, we direct the appellant to pay a sum          A
of Rs.6,00,000/- to the IRP, to be paid towards the expenditure that
might have been incurred by the IRP and also the litigation costs, which
shall be paid to the IRP by way of a Demand Draft within a period of
two weeks from today.
       17. The present proceedings stand disposed of accordingly, in terms      B
of the above order. All other pending Interlocutory Applications stand
disposed of.

Devika Gujral                                            Matters disposed of.
                                                                                C




                                                                                D




                                                                                E




                                                                                F




                                                                                G




                                                                                H