Jasmine Buildmart Pvt. Ltd., a Gurgaon-based real estate company, is the appellant and the corporate debtor. It failed to deliver its housing project, Krrish Provence Estate, to its purchasers even after eight years. Three of these homebuyers filed a Section 7 application with the National Company Law Tribunal in Delhi on December 6, 2018, requesting the start of CIRP against the Corporate Debtor. Additionally, they requested a return of Rs. 6,93,02,755 due to the excessive delay in the project's completion and failing to turn over ownership within the allotted time. The NCLAT heard an appeal of the NCLT's order authorising the start of the CIRP. But even the NCLAT supported the ruling.
In the instant case titled Amit Katyal v. Meera Ahuja and Ors., the issue raised for clarification before the SC was was:
If Article 142 of the Indian Constitution is read in conjunction with Rule 11 of the NCLT Rules 2016, can the original applicants be permitted to withdraw from the CIRP proceedings?
With regard to this issue, the CIRP proceeding was delayed within ten days of the committee of creditors' (hereafter COC) formation, the Supreme Court observed. In addition, the members make up 70% of the COC who are eager to participate in the Flat Buyers Association have the CIRP proceedings dismissed, provided that the firm that is a corporate debtor honours the settlement strategy. Considering the consequences, according to the Apex Court, if the CIRP continuing the process would result in a moratorium under Section 14 and stay of any ongoing legal actions, which would prohibit the starting of new legal action against the builder, as well as actions taken by homebuyers for reimbursement for any delayed possession. In the end, it was determined that the agreement reached between the homebuyers and the appellant/corporate debtor will make the business serve the greater interests of homebuyers.
The Court decided that it was appropriate to exercise its authority under Article 142 of the Indian Constitution as read with Rule 11 of the NCLT Rules, 2016, and to grant the original applicants' request to withdraw the CIRP. This was because 82 out of 128 homebuyers had been promised to receive possession of their property within a year, and they had also resolved their conflict with the corporate debtor proceedings.
The Court categorically stated that,
"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 projects. 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 the CIRP is successfully completed, the home buyers like all other creditors are subjected to the payouts provided in the resolution plan approved by the COC".