2025 (3) TMI 68 - AT - IBC

Approval of the resolution plan - approval of resolution plan after expiry of CIRP period - compliance with Section 30(2)(b) of the IBC specifically regarding the allocation of payments to dissenting financial creditors or not. Compliance with Section 30(2)(b) of the IBC or not - HELD THAT - From the materials on the record it is clear that only pay out under the plan is to the unsecured financial creditor which is Rs.1.5 Crore against the 13.81% vote shares. The appellant sought to raise a grievance that homebuyers are being provided unit and they are not sharing any haircut in their entitlement. It is true that the SRA is spending certain amount in completing the construction for delivering the unit to the homebuyer. Unsecured financial creditor who are dissenting financial creditor in the present case are entitled to the amount not less than the amount as contemplated by Section 30(2)(b) - The claim of unsecured financial creditor who are dissenting financial creditor which is admitted of not related parties is Rs.10.94 Crore. Vote share of dissenting financial creditor is 13.44 hence the payout of Rs.1.5 Crore to the dissenting financial creditor in no manner violates Section 30(2)(b). Law is well settled that jurisdiction of Adjudicating Authority and this Appellate Tribunal to interfere with approval of resolution plan is too limited. Adjudicating Authority can interfere with the approval of the resolution plan only in the case where there is a non-compliance of Section 30(2) of the IBC. Approval of resolution plan after expiry of CIRP period - HELD THAT - According to own case of appellant 330 days period expiring on 03.05.2023. Resolution plan has been approved by the CoC on 31.01.2023 and the application was filed for approval of the plan before the aforesaid expiry of 330 days period. The fact that Adjudicating Authority approved the resolution plan on 14.05.2024 cannot be a ground to say that the order was passed after expiry of 330 days. When the resolution plan has been approved within 330 days and the application was also filed by the RP for approval the date of the passing of the order by Adjudicating Authority cannot be relied for contending that the said date is beyond 330 days. The resolution plan having been approved by votes of 86.67% vote shares at the instance of dissenting financial creditor whose payments under the plan is not less than the payment which they are entitled under Section 30(2)(b) no interference is called. Conclusion - The plan complied with the statutory requirements under the IBC. Adjudicating Authority by the impugned order has not committed any error in approving the resolution plan submitted by SRA. Appeal dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment were:

• Whether the resolution plan was approved after the expiry of the Corporate Insolvency Resolution Process (CIRP) period as stipulated under the Insolvency and Bankruptcy Code, 2016 (IBC).
• Whether the resolution plan complied with Section 30(2)(b) of the IBC, specifically regarding the allocation of payments to dissenting financial creditors.
• Whether the treatment of unsecured financial creditors, compared to homebuyers, was fair and equitable under the resolution plan.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Approval of the Resolution Plan Post CIRP Period

• Relevant Legal Framework and Precedents: The CIRP period is generally capped at 330 days under the IBC, beyond which a resolution plan should not be approved unless an extension is granted.
• Court's Interpretation and Reasoning: The Tribunal noted that the resolution plan was approved by the Committee of Creditors (CoC) on 31.01.2023, and the application for approval was filed within the 330-day period, which expired on 03.05.2023. The Tribunal emphasized that the date of the adjudicating authority's order (14.05.2024) is not pertinent to the 330-day calculation.
• Conclusions: The Tribunal concluded that the resolution plan was approved within the permissible period, and thus, the approval was validly within the statutory timeline.

Issue 2: Compliance with Section 30(2)(b) of the IBC

• Relevant Legal Framework and Precedents: Section 30(2)(b) mandates that dissenting financial creditors receive an amount not less than what they would receive in a liquidation scenario under Section 53 of the IBC.
• Court's Interpretation and Reasoning: The Tribunal observed that the resolution plan provided a payout of Rs.1.5 Crore to the unsecured financial creditors, which constituted 13.81% of the vote shares. This payout was deemed compliant with Section 30(2)(b) as it was not less than the liquidation value.
• Conclusions: The Tribunal found that the resolution plan was compliant with Section 30(2)(b), ensuring that the dissenting financial creditors received a fair and equitable distribution.

Issue 3: Fair and Equitable Treatment of Unsecured Financial Creditors vs. Homebuyers

• Relevant Legal Framework and Precedents: The Tribunal referenced previous judgments which established that homebuyers, as a class of financial creditors, are entitled to possession of units without additional financial burden, contrasting with the claims of unsecured financial creditors.
• Court's Interpretation and Reasoning: The Tribunal highlighted that homebuyers, holding 86.56% voting shares, had already paid consideration for their units and were entitled to possession. The Tribunal cited the judgment in 'Beacon Trusteeship Limited' which supported the differential treatment between homebuyers and financial creditors.
• Conclusions: The Tribunal concluded that the differential treatment was justified and aligned with the commercial wisdom of the CoC, which cannot be substituted by judicial intervention.

3. SIGNIFICANT HOLDINGS

• Core Principles Established: The Tribunal reaffirmed the principle that the commercial wisdom of the CoC is paramount and should not be easily interfered with unless there is a clear violation of statutory provisions.
• Final Determinations on Each Issue: The Tribunal dismissed the appeals, upholding the resolution plan's approval, and confirmed that the plan complied with the statutory requirements under the IBC.

The Tribunal emphasized that the jurisdiction to interfere with the approval of a resolution plan is limited to instances of non-compliance with Section 30(2) of the IBC. The appeals were dismissed, affirming that the resolution plan was appropriately approved and binding on all creditors, including dissenting ones.