2022 (10) TMI 703 - AT - Insolvency and Bankruptcy

Approval of Resolution Plan - Rights and duties of authorised representative of financial creditors - Section 25A (3A) of IBC - HELD THAT - There is no dispute to the fact that the Resolution Plan has been approved by 99.97% of vote shares of CoC. The Appellant- Earth Buyers Association For Justice itself is not member of the CoC. The 35 homebuyers who were sought to be brought on record, 29 homebuyers have not voted for the plan and the class of homebuyers have to sail with the majority of the votes of the homebuyers - even if some of the homebuyers have not voted in favour of the plan they have to sail with the majority. The procedural violations which were sought to be urge before us are not sufficient enough to interfere with the order approving the Resolution Plan. To the similar effect is the Resolution Plan with regard to other two projects, the plan clearly mention that Resolution Applicant proposes to satisfy all the admitted claims in respect of the project by completing the pending construction activities and handing over possession to the allottees, in the manner as proposed, and subject to terms and conditions mentioned in the Resolution Plan. Thus, no good grounds have been made out to interfere with the impugned order approving the Resolution Plan - appeal dismissed.

Summary

Issues:
1. Approval of Resolution Plan by Adjudicating Authority
2. Addition of homebuyers/Financial Creditors in a class on the record
3. Conduct of voting project-wise
4. Procedural violations by Resolution Professional and Authorised Representative
5. Rights and duties of authorised representative of financial creditors
6. Binding nature of voting share of financial creditors
7. Clauses of the Resolution Plan for Project Earth Copia, Project Earth Sapphire Court, and Project Earth Techone

Analysis:

1. The Appeal challenges the approval of the Resolution Plan by the Adjudicating Authority. The Corporate Insolvency Resolution Process (CIRP) commenced against the Corporate Debtor, and the Resolution Plan was approved by 99.97% votes of the Committee of Creditors (CoC). The Appellant, not a member of the CoC, raised objections regarding the approval process.

2. An application was filed to add 35 homebuyers/Financial Creditors in a class on record. The Respondents objected, stating that 29 out of 35 did not vote on the Resolution Plan. The Respondents argued that the Appeal should not be entertained by the Tribunal.

3. The Appellant argued that voting on the Resolution Plan should have been conducted project-wise, highlighting procedural violations by the Resolution Professional and Authorised Representative. The Resolution Professional and Successful Resolution Applicant contended that the majority of homebuyers approved the plan, and procedural violations were denied.

4. The rights and duties of the authorised representative of financial creditors were discussed, emphasizing the binding nature of the voting share of financial creditors. The Supreme Court's decision in a related case was cited to support the argument that the minority of homebuyers must abide by the majority decision.

5. The clauses of the Resolution Plan for various projects were examined, focusing on satisfying admitted claims by completing pending construction activities and handing over possession to allottees. The clauses aimed to protect the interests of homebuyers-allottees and were deemed to do substantial justice.

6. The Tribunal concluded that the Resolution Plan adequately protected the interests of homebuyers, and no sufficient grounds were presented to interfere with the order approving the Resolution Plan. Therefore, the Appeal was dismissed based on the detailed analysis of the issues raised.