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2024 (3) TMI 987 - AT - Insolvency and BankruptcyApproval of Resolution Plan by the Adjudicating Authority - plan was approved by the Committee of Creditors - constitution of CoC. - Group of 77 homebuyers as a class of creditors seeking rejection of plan. Sustainability of the argument advanced by the Learned Counsel for the Appellant that the constitution of the CoC stood vitiated because of the related party status of the Financial Creditor and Corporate Debtor - HELD THAT - In view of absence of material placed on record and lack of substantiation of pleadings made by the Appellant of related party status of the Financial Creditor/Respondent No. 2 and the Corporate Debtor, it is not inclined to subscribe to the bogey of related party issue raised by the Appellant. Having failed to adequately demonstrate the related party status of the Financial Creditor/Respondent No. 2, and the Corporate Debtor, there are no irregularity on the part of the RP in constituting the CoC with the Financial Creditor/Respondent No. 2 as a member thereof. Financial Creditor/Respondent No. 2 was assigned a higher vote share than its entitlement - HELD THAT - There was discriminatory treatment of the claims made by the Appellant as against what was offered to the Financial Creditor/Respondent No. 2 is clearly misconceived since the RP was diligently updating the claims and the corresponding vote share of the financial creditors. Not having pointed out any irregularity on the part of the RP in constituting the CoC with the Financial Creditor/Respondent No. 2 having majority vote share prior to the CoC approving the resolution plan, it cannot be agitated now at this belated stage when the resolution plan stands approved. Thus, to answer the second issue, the CoC is found to have been validly constituted based on the duly verified claims of the financial creditors, to which no objections were raised by the Appellant, there are no cogent reasons to hold the decisions taken by the CoC to be either irregular or invalid. Whether the RP was actively following up the TMC reservation issue or not? - HELD THAT - The CoC was periodically kept apprised of the follow up steps taken by the RP in dealing with this issue which included visit to the TMC office and filing of an RTI application to find out the correct status of the reservation. The Resolution Professional had also taken up the matter through the architect to enquire about the reservation status besides seeking legal opinion on the matter and appointing a legal firm to seek appropriate legal remedy. Thus, the Resolution Professional cannot be held responsible for having suppressed any material fact pertaining to the TMC reservation issue from the CoC members including the AR. Keeping in mind the above-cited multifarious efforts made by the RP, the bonafide of the RP in this regard cannot be doubted. Hence, there are no infirmity or error in the findings recorded by the Adjudicating Authority in respect of the conduct of the Resolution Professional. The RP at all stages had facilitated the Homebuyers in raising their concerns and objections to the resolution plan through the AR and in fact also provided them the window of opportunity of taking up their issues with the SRA. Under such circumstances, but for bald assertions, there is nothing to show that there has been negligence or dereliction of duties and responsibilities cast on the RP which can be said to have caused any serious miscarriage of justice to the Appellant - thus no cause of action survives on this count. Whether the approval of the resolution plan by the Adjudicating Authority deserves to be set aside or the CoC approved resolution plan be sent back for the SRA/Respondent No. 3 to make necessary changes to the plan in the order to cater to the needs and demands of the Homebuyers as has been urged by the Appellant? - HELD THAT - It is an undisputed fact that the resolution plan of the SRA has been approved by the CoC with requisite vote share. This resolution plan duly approved by the CoC with 89.05% vote share was placed before the Adjudicating Authority which has already approved the resolution plan. In the instant case, we find that when the resolution plan came up for consideration and approval before the Adjudicating Authority, the SRA improvised and upwardly revised its offer by way of an affidavit agreeing to pay 100% of the principal amount of the Homebuyers as against refund of approximately 40% of the claim amount admitted by the RP which was initially contained in the CoC approved resolution plan. This amount was acceptable to the Homebuyers and has not been objected to by any of the 77 Homebuyers. Whether in the given circumstances, the Appellant as a disgruntled solitary homebuyer or at best representing 77 Homebuyers can raise objections against the collective business decision taken by the CoC approving the resolution plan of the SRA? - HELD THAT - In the present matter at hand, neither any contravention of law nor material irregularity has been brought on record. It is settled law that once the CoC has approved the resolution plan by requisite majority and the same is in consonance with applicable provisions of law and nothing has come to light to show that the RP had committed any material irregularities in the conduct of the CIRP proceedings, the same cannot be a subject matter of judicial review and modification. In any case, quite apart from the fact that the resolution plan is already under implementation it has also not been controverted by the Appellant that all the 77 Homebuyers including the Appellant have accepted the offer of 100% of their principal amount from the SRA. The intent, objective and purpose of IBC being time bound resolution of insolvency of the Corporate Debtor, it clearly does not provide any leeway or scope to dissatisfied individual Homebuyers in a minority like the present Appellant to override the commercial wisdom of the majority in the CoC. There are no merit in the contention of the Appellant to reject the CoC approved resolution plan which has since been approved by the Adjudicating Authority. Any indulgence shown would tantamount to derailing the resolution process and setting the clock back which we cannot countenance. There are no sufficient and plausible grounds made which warrant any interference with the impugned order. There is no merit in the appeal - Appeal dismissed.
Issues Involved:
1. Related Party Status of Financial Creditor. 2. Vote Share Assignment to Financial Creditor. 3. Handling of TMC Reservation Issue by Resolution Professional. 4. Approval of the Resolution Plan. Summary: 1. Related Party Status of Financial Creditor: The Appellant contended that the Financial Creditor (Respondent No. 2) and Corporate Debtor were "related parties" under \u/s\ 5(24)(h) and 5(24)(m) of the IBC, which should invalidate the CoC's constitution. However, the Tribunal found no categorical material or proof indicating that the Corporate Debtor acted on the advice, direction, or instruction of the Financial Creditor. The Appellant failed to substantiate claims of participation in policy-making or managerial control by the Financial Creditor. The Tribunal concluded that the related party status was not adequately demonstrated, and the CoC was validly constituted. 2. Vote Share Assignment to Financial Creditor: The Appellant argued that the Financial Creditor's claim was inflated by adding penal interest, thus wrongly giving it a majority vote share. The Adjudicating Authority had already addressed this issue, noting that even without penal interest, the Financial Creditor's vote share exceeded the required threshold. The Tribunal found no irregularity in the RP's assignment of vote shares, which had been diligently updated and verified. 3. Handling of TMC Reservation Issue by Resolution Professional: The Appellant claimed that the RP mishandled the TMC reservation issue, leading to the withdrawal of potential resolution applicants. The Tribunal noted that the RP had taken multiple steps to address the TMC reservation, including legal consultations and RTI applications. The RP's actions were transparent and regularly communicated to the CoC. The Tribunal found no merit in the Appellant's contention that the RP's conduct was biased or negligent. 4. Approval of the Resolution Plan: The Appellant sought to reject the CoC-approved resolution plan or send it back for modifications. The Tribunal emphasized that the resolution plan had been approved by the CoC with an 88.95% vote share and subsequently by the Adjudicating Authority. The Appellant, representing a minority, could not override the majority's commercial wisdom. The Tribunal cited the Supreme Court's decision in Jaypee Kensington Boulevard Apartments Welfare Association and Ors. vs NBCC (India) and Ors., affirming that individual dissenting homebuyers must "sail along" with the majority. The Tribunal found no material irregularity or contravention of law in the resolution plan's approval and dismissed the appeal.
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