Inakshi Sobti And Ors. vs Starlight Systems (I) Pvt. Ltd. & Anr
Company Appeal (AT) (Insolvency) No. 359 of 2024
Facts:
1) Appellants have purchased flat from ‘Signia Pearl Co-operative Housing Society’ and entered into Agreement for Sale by the Corporate Debtor- ‘Starlight Systems (I) Pvt. Ltd.’, the developer. Appellants claim to have paid amount of Rs.30,00,000/- towards maintenance/ corpus fund and management charges. Under Clause 9 of the Agreement for Sale, the Corporate Debtor was under an obligation to transfer the unutilized amount out of the aforesaid sum of Rs.30,00,000/- paid by Appellant No.1 to the Association of Unit Holder
2) Civil Suit (L) No. 196 of 2020 was filed by the Appellant before the Bombay High Court praying for grant of conveyance of the land/ building and certain other reliefs. Appellant filed Section 7 application before the Adjudicating Authority dated 06.07.2023 for initiation of the CIRP against the Corporate Debtor for a default of Rs.7,65,00,000/-. Date of default mentioned in Part IV was 05.09.2020. An application IA No.5054 of 2023 was filed by the Appellant seeking amendment of Section 7 application.
3) Adjudicating Authority vide impugned order rejected amendment application and dismissed Section 7 application as barred by Section 10A. By amendment application, appellant sought to amend the date of default 05.09.2020 to 01.04.2021. Adjudicating Authority took the view that financial creditor has already been stated in Part-IV the date of default as 05.09.2020. Amendment application is attempt to change the date of default. Challenging the order of the Adjudicating Authority, this appeal has been filed.
Issue: Whether the appeal can be allowed ?
Arguments:
Appellant:
1) Counsel submitted that Appellant had every right to amend the Section 7 application. It is submitted that the pleadings in the application was that the Corporate Debtor till date has defaulted in transferring of amount. As per Clause 8 of the Agreement to Sale, it is clearly mentioned that there was continuous cause of action in favour of the Appellant. There being continuous cause of action, date of default was sought to be changed from 05.09.2020 to 01.04.2021 i.e. the first day after the close of financial year 2020-2021.
Respondent:
1) Counsel submitted that date of default having clearly pleaded in Part IV of Section 7 application which date of default fell within bar under Section 10 A of the IBC, the Appellant cannot be allowed to change the date of default to defeat the law which bars any application for default committed during 10A period. It is submitted that by amendment no fresh cause of action can be introduced by the appellant. By the amendment application, the Appellant is seeking to change the cause of action which is total inconsistent of the case as set out in Section 7 application.
Decision: NCLAT dismissed the appeal.
Rationale:
1) IT held that present is not a case where any clarification or explanation is sought to be offered for date of default 05.09.2020 mentioned in Section 7 application. The date of default in itself is sought to be changed as 01.04.2021 without there being any reason or cause. As noted above, Appellant themselves has stated that after registration of society of the appellant on 04.09.2020, the corporate debtor was liable to refund the amount to the appellants which default took place on 05.09.2020.
2) It held that Date of default cannot be permitted to be changed. Appellants themselves cannot change the date of default by stating that they give more time to the corporate debtor. When the default has been committed by the corporate debtor all consequences shall ensue. After rejection of application of amendment, the Adjudicating Authority did not commit any error in rejecting Section 7 application as barred by Section 10A. In Section 7 application, date of default was mentioned as 05.09.2020 which fell within the prohibited period under Section 10A. Section 10A clearly mandated that no application can ever be filed with regard to default which has committed during 10A period.
Order:
