Wave Mega City Center Private Limited v/s Rakesh Taneja

1. A lease was signed between the Noida authority and wave mega city center private limited for 90 days. Wave Megacity paid the payment of 10% of the total consideration, but wave megacity somehow could not complete the project within 90 days and failed to pay 90% of the premium amount.
    
2. The appellant neither completed the construction nor handed over the possession. In 2017 appellant stopped the construction of the project.
    
3. In 2016 the Govt of the U.P. introduced the PSP (project settlement policy) and allowed builders/developers to return the project land if they were unable to construct it, it was then Wave mega city approached Noida authority to take relief under PSP.
    
4. The demand made by the Noida authority was challenged by the wave mega city home buyers through writs before the Allahabad high court meanwhile the appellant applied section 10 of the IBC code 2016. Praying for initiation of CIRP against the corporate debtor on the ground of default on the part of the corporate debtor.
    
5. In response to the CISR, the respondent along with others filed an application under sec 65 of the IBC Code 2016 praying to reject the application filed under section 10 of the IBC Code 2016. The allottee of the application pleaded that the said application is filed with malicious and fraudulent intent for a purpose other than the resolution of insolvency.
    
6. The challenge in the present Appeal is, that order passed by the Adjudicating Authority is allowing Applications filed under Section 65 and consequently rejecting Section 10 Applications.
    
7. Then, an appeal was made to the National Company Law Appellate Tribunal (NCLAT) against the order passed by the NCLT.

1. The adjudication authority came to the conclusion that the resignation of directors few months before filing under section 10. The application fully shows the malicious intention of the corporate debtor.
    
2. The Adjudicating Authority is not obliged to admit the Section 10 Application. Sections 10 and 65, which are part of the same statutory scheme, need to be read together to give effect to the legislative scheme of the Code. The present is a case where it has been held that the Application under Section 10 has been maliciously and fraudulently initiated for a purpose other than for the resolution of insolvency.
    
3. Court was satisfied that Adjudicating Authority did not commit any error in allowing Section 65 Applications and rejecting the Section 10 Application. When Applications under Section 65 were allowed holding that initiation of proceedings under Section 10 was done fraudulently and maliciously for a purpose other than resolution, rejection of Section 10 Application is consequent and inescapable.

1. https://www.livelaw.in/news-updates/nclat-delhi-upholds-dismissal-of-wave-megacitys-section-10-application-by-aa-218198
2. https://indiankanoon.org/doc/165113993/
3. https://www.scconline.com/blog/post/2023/02/01/application-for-initiation-of-corporate-insolvency-resolution-process-can-be-rejected-if-it-is-filed-fraudulently/