2021 (7) TMI 371 - AT - Insolvency and Bankruptcy

Application for seeking liquidation order of the Corporate Debtor - Section 61 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - There is a difference of CoC where they are Banks and Institutional lenders as members, while the CoC in the Homebuyers are not so expert in finance and related valuations. Hence, CoC in case of the commercial organisations will have a different perspective and expertise while in case of Real Estate projects where the CoC are totally comprising of homebuyers may not have the same expertise and perspective. Although, in case of Homebuyers provisions exists for Authorised Representatives but even he cannot be equated with the expertise with the banking professional will have. We are not passing any comments on specific Authorised Representatives. While the Resolution Plan will generally provide a higher value than the liquidation value but in case of Real Estate Project may not be always feasible and homebuyers are in dire need of getting their homes at the earliest. However, in this case certain reconciliation are required that what is the actual realisable value which the homebuyers are getting whether it is below liquidation value or above liquidation value. There is a need for impleading Yamuna Expressway Industrial Development Authority (YEIDA) to ascertain status of dispute with farmers and its consequential impact, if any, on this projects - matter remanded to the Adjudicating Authority and liquidation order is set aside with a direction to review the programme in full alongwith the relevant provisions of the code and Regulations and then the Adjudicating Authority is free to pass appropriate order as they think fit and proper in accordance with law. Appeal allowed by way of remand.

Issues:
1. Rejection of the Resolution Plan by the Adjudicating Authority.
2. Compliance with the provisions of the Insolvency and Bankruptcy Code, 2016.
3. Comparison of Resolution Plan with Liquidation Value.
4. Impact of Supreme Court judgment on the case.
5. CoC decision-making and expertise.
6. Need for reconciliation of realizable value for homebuyers.
7. Implications of CIRP Regulations amendments.
8. Impleading Yamuna Expressway Industrial Development Authority (YEIDA).
9. Consideration of liquidation as a last resort.

Issue 1: Rejection of the Resolution Plan by the Adjudicating Authority
The Adjudicating Authority rejected the Resolution Plan for M/s. Three C Homes Pvt. Ltd based on factors such as the disparity between the liquidation value and the proposed infusion by the Resolution Applicant, assumptions regarding farmer claims, and non-compliance with the CIRP Regulations. The Authority cited the Maharashtra Seamless Ltd. case to emphasize the importance of fulfilling homebuyers' interests in Resolution Plans.

Issue 2: Compliance with the provisions of the Insolvency and Bankruptcy Code, 2016
The Appellant argued that the Adjudicating Authority failed to consider various calculations impacting the proposed &8377; 95 Crores infusion, including debts due to allottees, payments to ex-management, discounts, and payments to creditors. They also raised concerns regarding the timing of the CoC meeting and the notification date of CIRP Regulations amendments.

Issue 3: Comparison of Resolution Plan with Liquidation Value
The Appellant highlighted that the Resolution Plan received 62.9% voting share, equivalent to 100% as per the Code, and challenged the Authority's decision to reject the Plan. They argued that the CoC's commercial decisions should not be overturned by the Adjudicating Authority.

Issue 4: Impact of Supreme Court judgment on the case
The Authority considered the implications of the Supreme Court judgment in the Maharashtra Seamless Ltd. case, emphasizing the need to assess the Resolution Plan's ability to meet homebuyers' expectations in comparison to the liquidation value.

Issue 5: CoC decision-making and expertise
The Tribunal noted the difference in expertise between CoCs comprising banks and institutional lenders versus those solely comprising homebuyers. It highlighted the need for expertise in evaluating Resolution Plans, especially in Real Estate projects, and emphasized the importance of expert perspectives in decision-making.

Issue 6: Need for reconciliation of realizable value for homebuyers
In the context of Real Estate projects, the Tribunal stressed the importance of assessing the actual realizable value for homebuyers, considering whether it meets or exceeds the liquidation value. It emphasized the urgency of providing homes to homebuyers promptly.

Issue 7: Implications of CIRP Regulations amendments
The Tribunal highlighted the significance of the CIRP Regulations amendments and the need to review the Resolution Plan in light of these changes, ensuring compliance with the updated regulations for a fair evaluation.

Issue 8: Impleading Yamuna Expressway Industrial Development Authority (YEIDA)
The Tribunal recommended involving YEIDA to clarify any disputes with farmers and their potential impact on the project, emphasizing the importance of addressing all relevant stakeholders in the resolution process.

Issue 9: Consideration of liquidation as a last resort
Recognizing liquidation as a final option, the Tribunal emphasized the need for a thorough evaluation and calibration of the homebuyers' program, ensuring proper assessment and adherence to legal provisions before resorting to liquidation.

In conclusion, the Tribunal remanded the matter back to the Adjudicating Authority for a comprehensive review, directing a thorough assessment of the Resolution Plan in line with the Code and Regulations. Pending issues were disposed of, and any interim orders were vacated, with no costs imposed.

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