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2024 (2) TMI 1219 - AT - Insolvency and BankruptcyApproval of Resolution Plan - homebuyers are waiting their units to be given possession for the last several years and by appeal filed by promoters/directors, process is being delayed. First judgment delivered by the Hon ble Supreme Court in respect to CIRP of the Corporate Debtor is the Judgment of the Hon ble Supreme Court in Chitra Sharma Vs. Union of India 2018 (8) TMI 661 - SUPREME COURT - HELD THAT - In this case, Hon ble Supreme Court exercised its jurisdiction under Article 142 in reviving the CIRP of the Corporate Debtor. Judgment of the Hon ble Supreme Court in Jayprakash Associates Limited Vs. IDBI Bank 2019 (11) TMI 316 - SUPREME COURT - HELD THAT - Hon ble Supreme Court exercised its jurisdiction under Article 142 of the Constitution of India directing that 90 days extended period be reckoned from the date of the Judgment - Another direction issued in the above case was that the IRP to complete the CIRP process within 90 days and it will be open to the IRP to invite revised resolution plan only from Suraksha Realty and NBCC respectively who were finally bidders and had submitted resolution plan on the earlier occasion. Judgment of Hon ble Supreme Court in Jaypee Infratech Limited Vs. Axis Bank Ltd. 2020 (2) TMI 1259 - SUPREME COURT - HELD THAT - Hon ble Supreme Court held that approval of the Resolution Plan is exclusively in the domain of the commercial wisdom of the CoC, the scope of judicial review is circumscribed. After noticing the Judgments of the Hon ble Supreme Court which was delivered in the CIRP of the Corporate Debtor and certain background facts, now the question which have been framed are now considered. Whether Appellants have locus to challenge the order dated 07.03.2023 passed by the Adjudicating Authority approving the Resolution Plan of Suraksha Realty? - HELD THAT - The main reasons for dismissing the appeal has been contained in paragraph 48. The main reason, where the court has observed that one who does not come to a court with clean hand may not get any relief. It was held that conduct of the Appellant in both the appeals is not transparent. In the present case, there are several other facts which need to be noticed. For example, the Appellants were permitted to file objections before the Adjudicating Authority against the resolution plan and their objections were heard on merits, promoter and director was also impleaded as one of the parties in appeal of NBCC, objections of appellants were also noticed by Hon ble Supreme Court in earlier round of litigation that is while deciding Jaypee Kensington Case 2021 (3) TMI 1143 - SUPREME COURT - the appeals of appellant cannot be thrown out on the ground of locus. The limited ground to challenge approval of the resolution plan is that the same is not in conformity with Section 30(2) - the objection of the respondent on the locus is rejected and it is proceeded to examine the submissions raised by the Appellant. Whether the treatment of Income Tax dues in the Resolution Plan where they have been treated as Operational Creditor and offered only Rs. 10 Lacs violates the provision of sub-section (2) of Section 30? - HELD THAT - The income tax department has itself filed an appeal being C.A.(AT) Ins. No. 549 of 2023 which has been decided on 26.09.2023 where this Tribunal came to the conclusion that there is no violation of provision of Section 30(2)(b) in so far as treatment of the claim of the income tax department is concerned and the order of the Adjudicating Authority not being interfered with in the Appeal, Appellant is not entitled to raise any further issues regarding the dues of the income tax department which has been concluded in the Appeal filed by the Income Tax Department itself. This Tribunal having held that there is no non-compliance of section 30(2)(b) with regard to treatment of claim of the income tax department who is operational creditor, we cannot accept the submission of the Appellant that there is any violation of section 30(2) of the Code with respect to claim of income tax department - there is no violation of provisions of subsection (2) of Section 30 of the Code with regard to dues of the Income Tax Department. Whether the treatment of claim of YEIDA towards farmers' compensation and other claims of the YEIDA being treated as Operational Creditor and having offered only Rs. 10 lacs towards satisfaction of their dues violates provision of subsection (2) of Section 30 of the Code and the Resolution Plan deserves to be set aside on this ground alone? - Whether YEIDA is a Secured Creditor of the Corporate Debtor? - HELD THAT - The issues pertaining to the claim of YEIDA and their ground to challenge the impugned order approving Resolution Plan are best suited to be examined and decided in the appeal filed by YEIDA where impugned order is under challenge and grounds have been raised - the issues raised by the Appellant need to be examined and considered in the appeal filed by YEIDA and there is no necessity to consider those issues in this appeal which is filed by the Suspended Promoter and Director of the Corporate Debtor. Answer to both the questions is recorded accordingly. Whether the Resolution Plan violates provision of Section 30(2)(e) of the Code in removing the right of subrogation to the guarantors whereas under Indian Contract Act a surety or guarantor has right to subrogation and further upon discharge of principal debtor to repay the debt the liability of surety also gets extinguished? - HELD THAT - In the facts of the present case, it is not the case of the Appellant that the Corporate Guarantor and Personal Guarantor have paid the dues of the creditor and thus they are entitled to get in the shoes of the principal creditor. On this single ground claim of Section 140, does not subsist. In the present case, debt of the Principal Borrower is being discharged consequent to the Resolution Plan under the IBC - Clause 34.50 is already noticed which expressly takes away the right of subrogation to the Guarantors. The Hon ble Supreme Court had occasion to consider the right to Guarantors consequent to approval of Resolution Plan in IBC in Lalit Kumar Jain vs. Union of India, 2021 (5) TMI 743 - SUPREME COURT . Submission was advanced before the Hon ble Supreme Court that once a resolution plan is accepted, the corporate debtor is discharged of liability. As a consequence, the guarantor whose liability is co-extensive with the principal debtor i.e. the corporate debtor, too is discharged of all liabilities - The Hon ble Supreme Court noted relevant provisions of the Contract Act including Section 141 of the Contract Act. The Hon ble Supreme Court laid down that approval of Resolution Plan and finality imparted to it does not per se operate as a discharge of the guarantor s liability. The law is thus well settled that after approval of the Resolution Plan, the Personal Guarantors and Corporate Guarantors have no right of subrogation especially when in the facts of the present case under Clause 34.50 of the Resolution Plan, right of subrogation is expressly extinguished. The debt against the Corporate Debtor might have extinguished after approval of the Resolution Plan but said consequence shall not be with regard to the Corporate Guarantors and the Personal Guarantors. The same shall be as per the express provisions of the Resolution Plan - there are no substance in submission of the Appellant that debt is extinguished under Section 135 and they have right of subrogation under Section 140 and to receive provision of securities under Section 141, cannot be accepted. Whether the Adjudicating Authority having denied several reliefs and concessions which clearly means that those provisions of Resolution Plan have been disapproved, the Adjudicating Authority ought not to have been approved the Resolution Plan and only course available for the Adjudicating Authority was to send the plan back to the CoC for reconsideration? - Whether the Adjudicating Authority in granting various reliefs and concessions has exceeded the jurisdiction vested in the Adjudicating Authority and by issuing various directions, Adjudicating Authority travelled beyond its jurisdiction and further no direction could have been given to statutory authority as has been directed in the impugned order, which is impermissible? - HELD THAT - The SRA has prayed for issuance of necessary directions to SEBI, relevant stock exchanges and MCA for expediting the delisting of shares and take necessary actions in a time bound manner as applicable under the prevailing laws in order to implement the Resolution Plan. The above direction is only for the purpose of implementing the Resolution Plan and does not violate any statutory provisions. The use of expression as applicable under the prevailing laws clearly indicate that the SRA is not seeking any relief and concession in violation of any applicable law. The objection raised by the Appellant thus has no merit - The above direction is only to relevant RERA Authority to expeditiously make the appropriate changes in its records qua Projects, in accordance with the Resolution Plan. The said action is necessary consequence to the approval of Resolution Plan. The SRA is not asking any direction which is in violation of any applicable law. Thus, there is no error in granting the above relief by the Adjudicating Authority. The Successful Resolution Applicant has clearly contemplated that the Successful Resolution Applicant will implement the plan whether or not reliefs and concessions are granted - there are no infirmity in the reliefs and concessions granted by the Adjudicating Authority. As noted above, the fact that certain reliefs and concessions have not been granted could have not adverse effect on validity of the Resolution Plan or it can be said that any illegality has been crept in the Resolution Plan on the above ground. Whether Resolution Plan take into consideration 758 acres of land which became available to the Corporate Debtor consequent to allowing the avoidance application and subsequent to the judgment of the Hon'ble Supreme Court 2020 (2) TMI 1259 - SUPREME COURT ? - HELD THAT - The judgment of Hon ble Supreme Court in Anuj Jain Vs Axis Bank Ltd. 2020 (2) TMI 1700 - SUPREME COURT was delivered before approval of the Resolution Plan on 03.03.2020. From judgment of Jaypee Kensington of the Hon ble Supreme Court it is noticeable that even in NBCC s plan relief was sought with regard to 858 acres of land. Both the Resolution Applicants were thus well aware about order of the Hon ble Supreme Court dated 26.02.2020 and there was no occasion for not including the said land which was available for the kitty of the Corporate Debtor after release of encumbrances - there are no substance in submission of the Appellant that 758 acres of land has not been included in the plan submitted by Suraksha Realty. Whether applicants who have been permitted to intervene in the appeal are entitled for any relief? - HELD THAT - It is well settled that interveners by the I.A. cannot claim any relief for themselves. Interveners are either to support the order which is subject matter of challenge or support the Appellant in their challenge. The Applicants who have filed their claims before the IRP and whose claims are reflected are fully entitled to approach the SRA/Monitoring and Implementation Committee for their entitlement, for which they are entitled as per the Resolution Plan. There are no ground in these appeals to interfere with the impugned order dated 07.03.2023 passed by the Adjudicating Authority at the instance of the Appellants - appeal dismissed.
Issues Involved:
1. Locus standi of the appellants to challenge the resolution plan. 2. Treatment of Income Tax dues in the resolution plan. 3. Treatment of claims of YEIDA and whether YEIDA is a secured creditor. 4. Right of subrogation for guarantors. 5. Granting of reliefs and concessions by the Adjudicating Authority. 6. Consideration of 758 acres of land in the resolution plan. 7. Entitlement of applicants who intervened in the appeal. Summary: 1. Locus Standi of the Appellants: The appellants argued that they have sufficient locus standi to challenge the resolution plan as their objections were heard by the Adjudicating Authority and the Supreme Court in previous litigations. The tribunal acknowledged their locus standi, noting that their objections were considered on merits previously. 2. Treatment of Income Tax Dues: The appellants contended that future dues of the Income Tax Department could not be written off. However, the tribunal noted that the Income Tax Department had already challenged the order, which was decided by the tribunal on 26.09.2023, holding that the treatment of the claim was in accordance with Section 30(2)(b) of the IBC. Hence, the appellants' challenge on this ground was dismissed. 3. Treatment of Claims of YEIDA and Secured Creditor Status: The appellants argued that the resolution plan's treatment of YEIDA's claims violated Section 30(2) of the IBC. The tribunal noted that YEIDA had filed its own appeal challenging the treatment of its claims, and a settlement proposal was under consideration. Therefore, the tribunal decided that issues pertaining to YEIDA should be examined in YEIDA's appeal, not in the present appeal. 4. Right of Subrogation for Guarantors: The appellants claimed that the resolution plan unlawfully extinguished their right of subrogation. The tribunal referred to the Supreme Court's judgment in "Lalit Kumar Jain vs. Union of India," which held that the approval of a resolution plan does not discharge the guarantor's liability. The tribunal upheld the resolution plan's clause extinguishing the right of subrogation, finding no violation of the law. 5. Granting of Reliefs and Concessions by the Adjudicating Authority: The appellants argued that several reliefs and concessions granted by the Adjudicating Authority were impermissible. The tribunal examined the specific reliefs and found that they were necessary for the implementation of the resolution plan and did not violate any statutory provisions. The tribunal also noted that the successful resolution applicant had undertaken to implement the plan regardless of whether the reliefs and concessions were granted. 6. Consideration of 758 Acres of Land: The appellants contended that the resolution plan did not consider the 758 acres of land released from encumbrances. The tribunal noted that the resolution plan included the land, as confirmed by the respondents' detailed reply, and found no merit in the appellants' submission. 7. Entitlement of Applicants Who Intervened in the Appeal: The tribunal acknowledged the concerns of homebuyers regarding delays in project completion. It disposed of the intervention applications, directing applicants to approach the monitoring and implementation committee for their entitlements as per the resolution plan. Conclusion: The tribunal dismissed both appeals, finding no grounds to interfere with the Adjudicating Authority's order approving the resolution plan.
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