NCLAT Sets Aside Insolvency Proceedings against Ansal Properties and Infrastructure

Generally, a decree is an official order issued by an authority concerned. The appellate tribunal set aside the orders of the Delhi bench of the National Company Law Tribunal (NCLT), which had on March 17 directed to initiate insolvency proceedings against Ansal Properties and Infrastructure Ltd (APIL) and appointed an interim resolution professional replacing the board of the company.

NCLT’s direction had come over a petition filed by two flat buyers, who had jointly booked a unit at APIL’s Sushant Golf City in Lucknow. It admitted the insolvency plea against APIL based on the recovery certificate issued by the Uttar Pradesh Real Estate Regulatory Authority (UP RERA) to them. However, the appellate tribunal said NCLT landed in “grave error in admitting the application” of the two home buyers, who claimed to be the ‘Financial Creditors’ in their capacity as ‘decree-holders’ against the real estate firm on account of non-payment of the amount due under the recovery certificate issued by UP RERA.

According to NCLAT, the “execution of decree/ recovery of the amount due under Recovery Certificate would not justify triggering of Corporate Insolvency Resolution Process.” “We are of the considered view that the impugned order dated March 17, 2020 initiating Corporate Insolvency Resolution Process against Corporate Debtor cannot be sustained,” said NCLAT bench headed by Acting Chairperson Justice B L Bhat.

“The ‘Corporate Debtor’ (APIL) is released from all the rigour of law and is allowed to function independently through its Board of Directors from immediate effect,” said NCLAT. NCLAT direction came over a petition filed by Sushil Ansal, a director and shareholder of the company challenging the NCLT order before it.