2024 (9) TMI 1254 - AT - IBC

Approval of Resolution Plan - HELD THAT - The jurisdiction of Adjudicating Authority and the Appellate Tribunal to interfere with the Resolution Plan approved by the CoC, in exercise of its commercial wisdom, are well settled. The limited jurisdiction as has been recognized by the precedents of the Hon ble Supreme Court is when the Resolution Plan is in not conformity with statutory requirements of Section 30, sub-section (2) of the IBC. Thus, the jurisdiction with NCLT and Appellate Tribunal is limited to examine as to whether the Resolution Plan is in compliance with Section 30, sub-section (2), sub-clause (e) of the IBC. The part of the Resolution Plan being not in accordance with law, which has been approved by the Adjudicating Authority, the course open for this Tribunal is to either set aside the Resolution Plan or to delete the clauses, which are not in accordance with law to make the Resolution Plan compliant. The second course need to be adopted, by deleting the clauses in the Resolution Plan, which are contrary to the law, as per Section 30, sub-section (2), sub-clause (e), so as not to interfere with the other part of the Resolution Plan, which have been approved. The resolution plan modified partially. Application disposed off.

Issues Involved:

1. Approval of the Resolution Plan beyond the CIRP period.
2. Valuation of the Corporate Debtor's assets.
3. Inclusion of personal properties of promoters in the Resolution Plan.
4. Rejection of claims of homebuyers and treatment of their claims.
5. Treatment of Operational Creditors and Employees in the Resolution Plan.
6. Inclusion of third-party assets in the Resolution Plan.
7. Termination of lease agreements and extinguishment of third-party rights.

Detailed Analysis:

1. Approval of the Resolution Plan beyond the CIRP period:

The Appellants argued that the Resolution Plan was approved by the CoC after the expiry of the CIRP period, which ended on 13.06.2021. However, the Respondents presented orders dated 11.01.2022 and 20.06.2022, which granted exclusions, effectively extending the CIRP period until 24.08.2021. Consequently, the approval of the Resolution Plan on 13.08.2021 was within the extended CIRP period, and the Appellants' contention was dismissed.

2. Valuation of the Corporate Debtor's assets:

The Appellants challenged the valuation of the Corporate Debtor's assets, claiming undervaluation and discrepancies between the reports of two valuers. The Respondents argued that the valuation was conducted in accordance with CIRP regulations by two registered valuers, and no objections were raised by the CoC. The Tribunal, relying on precedents, held that valuation conducted as per statutory requirements cannot be interfered with, and the Appellants' objections were not entertained.

3. Inclusion of personal properties of promoters in the Resolution Plan:

The Appellants contended that personal properties of promoters were wrongly included in the Resolution Plan. The Tribunal noted that the properties in question were purchased using funds from the Corporate Debtor and its sister companies, and the Appellant held them in trust for the Corporate Debtor. Therefore, the inclusion of these properties in the Resolution Plan was justified.

4. Rejection of claims of homebuyers and treatment of their claims:

Homebuyers' claims were rejected by the Resolution Professional on the grounds of insufficient documentation. The Tribunal found that allotment letters issued by the Corporate Debtor acknowledged payments, and the rejection of claims was based on a technical view. The Tribunal directed the inclusion of these homebuyers in the Resolution Plan and ordered the SRA to treat them equally with other homebuyers whose claims were admitted.

5. Treatment of Operational Creditors and Employees in the Resolution Plan:

Operational Creditors and Employees claimed that the Resolution Plan provided them with inadequate payouts. The Tribunal noted that the amount proposed was not in violation of Section 30(2)(b) of the IBC, and without any specific pleading of such violation, the Tribunal could not interfere with the commercial wisdom of the CoC.

6. Inclusion of third-party assets in the Resolution Plan:

The Tribunal held that third-party assets, even if in possession of the Corporate Debtor, cannot be included in the Resolution Plan. The assets of DS Kulkarni and Company were excluded from the Resolution Plan as they were not owned by the Corporate Debtor, and the Tribunal directed necessary modifications to the Resolution Plan.

7. Termination of lease agreements and extinguishment of third-party rights:

The Tribunal found that the lease agreement with DSK Global Education and Research Pvt. Ltd. was not terminated during the CIRP, and the clauses in the Resolution Plan extinguishing the rights of the lessee were contrary to law. The Tribunal deleted these clauses from the Resolution Plan, preserving the rights of the lessee.

Conclusion:

The Tribunal upheld the Resolution Plan with modifications, ensuring compliance with legal provisions and protecting the rights of third parties and homebuyers. The appeals were partly allowed, and directions were issued to amend the Resolution Plan accordingly.

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