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2023 (8) TMI 488 - SC - Insolvency and BankruptcyRights of promoters - Promoters having failed in their initial duty to construct the flats or meet the obligation of the appellant still want to oppose the settlement as they claim that the appellant who made the financial contribution actually fall in the category of related party . HELD THAT - The Promoters agreed to the terms of the agreement for the investment of the appellant and entered into an exit agreement where they could not comply with the financial obligations. The dispute arose despite that in arbitration in which an award has been passed against the promoters. Almost 150 crores plus have been awarded to the appellant, out of which the appellant, according to the successful resolution plan, would get about 90 crores less the 11 crores being sacrificed for the flat buyers and objections under Section 34 of the Arbitration Act, 1996 have not moved at all, ostensibly on account of settlement talks. The statutory scheme makes it clear that the erstwhile Board of Directors are not members of the Committee of Creditors, but they do have a right to participate in the meetings held by the Committee of Creditors and have a right to discuss all resolution plans. The plan would now have to be placed before the NCLT, where the Board Members would be represented. Thus, the Promoters cannot derive any benefit out of the order of the NCLAT which is a common order in which they were one of the appellants and it is the flat buyers who are really the interested parties who have agreed to settle in the aforesaid terms - any claims or rights of the Promoters which they may seek from the NCLAT order impugned is closed. Appeal allowed.
Issues involved:
The judgment involves issues related to real estate project failure, Share Subscription and Shareholders Agreement (SSHA), Arbitration award challenge, Corporate Insolvency Resolution Process, status of the appellant as a 'related party', NCLT and NCLAT orders, approval of Resolution Plan, settlement between appellant and flat buyers, and the role of Promoters in the resolution process. Real Estate Project Failure: M/s Ambojini Property Developers Pvt. Ltd. advertised a project "Sai Peace and Prosperity Apartments" which failed to progress beyond piling work, causing distress to flat buyers. An Exit Agreement was later executed due to unresolved issues, leading to arbitral proceedings and an award against the Corporate Debtor and its Promoters for repayment. Arbitration Award Challenge: The Arbitration Tribunal awarded the appellant a significant sum jointly and severally with interest, creating a charge on the project land. The award was challenged before the Bombay High Court under Section 34 of the Arbitration Act, 1996, by the Corporate Debtor and its Promoters. Corporate Insolvency Resolution Process: An application was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, by an operational Creditor to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor. The status of the appellant as a Financial Creditor and 'related party' was contested, leading to NCLT and NCLAT orders. NCLT and NCLAT Orders: The NCLT and NCLAT issued conflicting orders regarding the appellant's status as a 'related party', affecting their inclusion in the Committee of Creditors. The NCLAT set aside the NCLT order, leading to appeals before the Supreme Court. Approval of Resolution Plan and Settlement: The Resolution Plan by Casagrande Regale Pvt. Ltd. was approved by a majority of CoC members, with a settlement reached between the appellant and flat buyers to facilitate both parties receiving their dues, including monetary sacrifices by the appellant for the benefit of flat buyers. Role of Promoters in Resolution Process: The Promoters contested the settlement, claiming the appellant should be considered a 'related party' despite their investment. The Supreme Court clarified the role of Promoters during the Corporate Insolvency Resolution Process and upheld the settlement between the appellant and flat buyers. Conclusion: The Supreme Court allowed the appeals, acknowledging the settlement between the appellant and flat buyers, and closing any claims or rights of the Promoters based on the NCLAT order. The resolution process was deemed to be in the interest of all parties involved, bringing closure to the matter.
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