The National Company Law Appellate Tribunal (NCLAT) has upheld the order passed by NCLT, Mumbai Bench, against the real estate giant Housing Development & Infrastructure Limited (HDIL) for initiation of insolvency proceedings under the Insolvency and Bankruptcy Code 2016 (IBC).
HDIL had contended that it was not given enough opportunity to put forth its case and hence the order was in violation of natural justice.
Dismissing the appeal filed by HDIL's Promoter Rakesh Wadhwan, the Principal bench observed that the corporate debtor's claim was erroneous and it had repeatedly defaulted in making the payment despite several opportunities and ample time was provided to settle the matter.
"…….Still, despite Company Appeal (AT) (Insolvency) No. 906 of 2019 7 of 8 taking several opportunities from the Adjudicating Authority for settlement with the Financial Creditor, the Corporate Debtor defaulted in making the payment. Therefore, the contention of the Appellant that Order has been passed without affording an opportunity for filing Reply, in violation of the principle of natural justice is without any basis."
Earlier in 2018, Bank of India had filed a petition at the Mumbai bench of NCLT for recovery of its dues but later withdrew the same when HDIL had proposed a one time settlement. Based on this offer NCLT had permitted the withdrawal of the petition. However, HDIL defaulted on the settlement by issuing post dated cheques which were returned and dishonored.
In a second round, on August 20th 2019, the Mumbai bench of NCLT allowed the insolvency proceedings filed by Bank of India under Section 7 of the IBC against HDIL for default in repayment of its dues amounting to Rs 522 crores.
Justice Bansi Lal Bhat, Acting Chairperson, Justice V. P. Singh, Member (Technical), Justice Alok Srivastava, Member (Technical) further held:
"It is pertinent to mention that statutory provision under the Insolvency and Bankruptcy Code, 2016 does not permit to provide several opportunities to corporate debtor in hope of the settlement. However, the adjudicating authority has tried his best to afford ample opportunity to both the parties to settle the matter amicably. But, despite that, the Corporate Debtor has failed to make the payment or arrive at a settlement………. …."
The appellate tribunal also observed that this was the second time that the lenders had to approach the NCLT for the default of the same debt.
"In view of our finding as aforesaid, no interference is called for against the impugned Order dated 20th August 2019. Therefore, Appeal fails. No order as to costs." the Bench further added.
Dr U.K. Chaudhary, Senior Advocate with Mr Farman Ali and Mr Ashish Verma, Advocates appeared for the Appellants
Mr Arun Kathpalia, Senior Advocate with Ms Meghna Rao, Mr Rana Mukherjee, Senior Advocate, Mr A.K. Mishra Saurabh Upadhyay and Ms Pallavi Pratap, Advocates appeared for the Respondents
Company Appeal (AT) (Insolvency) No. 906 of 2019