2021 (7) TMI 613 - Tri - Insolvency and Bankruptcy

Seeking to declare communication as null and void - seeking to direct the Resolution Professional to reject the claim submitted by the 1st Respondent - seeking declare the 1st Respondent's claim as erroneous - seeking reconstitution of CoC - HELD THAT - There is no dispute between the parties that the terms of the Exit Agreement could not be fulfilled and the Claimant/1st Respondent continued to remain invested. In para 9.60 of the Award, it is also discussed that the Respondent/Corporate Debtor had committed a breach of the terms of the Exit Agreement which constituted an event of default under the SSA in and by which the Claimant is entitled to require the promoter to pay to the Claimant the Total Investment with an IRR of 30%. In pursuance of the same the Claimant/1st Respondent issued a notice on 02.02.2016 - In para 9.63 of the Award, it has been stated that in view of the notice dated 02.02.2016 issued by the Claimant/1st Respondent, the 1st Respondent is entitled to a sum of ₹ 143,40,00,000/-. The crux and gravamen of the contention being raised by the Applicant in the present Application is that as per the Award the 1st Respondent is entitled only to the Remainder Amount in terms of para 9.66. However, a perusal of the operative portion of the Award posits the fact that the 1st Respondent is entitled to a sum of ₹ 155,32,56,626/- and that the manner in which the said amount is required to be paid as set out in para 9.64. It is to be noted that the claim of the 1st Respondent is not in any manner linked with the Remainder Amount. The concept of the Remainder Amount in the SSA only sets out the details of the amount, how the payments are required to be made to the 1st Respondent when the project is being developed and it does not in any manner change the position, either in fact or in law that as per the said Award the Corporate Debtor is bound and liable to repay the amount which is due to the 1st Respondent - from a conjoint reading of the award and the definition of the term 'claim', and viewed from the said perspective, the contention of the Learned Counsel for the Applicant the extent payable by the Corporate Debtor could be paid only from the Remainder Amount as per the Award, would render the entire Award otiose and thereby it would amount to material change in the Award dated 31.01.2018. The contention of the Learned Counsel for the Applicant that as on date the Remainder Amount is NIL would be of no relevance since it does not dilute the claim of the Applicant in any manner - Application dismissed.

Summary

Issues Involved:
1. Locus Standi of the Applicant.
2. Classification of the 1st Respondent as a Related Party.
3. Interpretation and Implications of the Arbitral Award dated 31.01.2018.

Detailed Analysis:

I. Locus Standi of the Applicant:
The Tribunal addressed the contention raised by the 1st Respondent regarding the Applicant's locus standi. The 1st Respondent argued that the Applicant, being an association of homebuyers, is not part of the Committee of Creditors (CoC) and thus lacks the standing to file the application. However, the Tribunal found merit in the Applicant's argument that their voting rights are adversely affected by the claim submitted by the 1st Respondent, which was admitted by the Resolution Professional. Consequently, the Tribunal held that the Applicants have the locus to file and maintain the present application due to the dispute over voting rights.

II. Classification of the 1st Respondent as a Related Party:
The Tribunal noted that the issue of whether the 1st Respondent is a Related Party to the Corporate Debtor had already been decided in a previous order dated 03.01.2020, which held that the 1st Respondent is not a Related Party. This decision is currently under appeal before the Hon'ble NCLAT. Therefore, the Tribunal refrained from expressing any opinion on this matter, deferring to the pending adjudication by the Appellate Tribunal.

III. Interpretation and Implications of the Arbitral Award dated 31.01.2018:
The Tribunal provided a detailed analysis of the Arbitral Award. The Award, resulting from arbitration proceedings involving the Corporate Debtor and its promoters, crystallized the amount payable by the Corporate Debtor to the 1st Respondent at ?155,32,56,626/- along with interest. The Applicant contended that the 1st Respondent is entitled only to the "Remainder Amount" as per para 9.66 of the Award, which they argued was NIL. However, the Tribunal clarified that the operative portion of the Award unambiguously entitles the 1st Respondent to the specified amount, and the concept of the "Remainder Amount" pertains only to the manner of payment during the project's development phase, not affecting the total amount due.

The Tribunal emphasized that the claim of the 1st Respondent is not contingent on the Remainder Amount and is supported by the definition of "claim" under Section 3(6) of the IBC, 2016, which includes a right to payment irrespective of its status as fixed, disputed, or undisputed. Therefore, the Tribunal concluded that the claim admitted by the Resolution Professional to the tune of ?182 crore is both legal and tenable.

Conclusion:
The Tribunal dismissed the application filed by the Applicant, affirming the legality and tenability of the 1st Respondent's claim of ?182 crore. The Tribunal also upheld the Applicant's locus standi while deferring the issue of the 1st Respondent's classification as a Related Party to the pending appeal before the Hon'ble NCLAT.