9911796707
TMI Blog2022 (12) TMI 1058X X X X Extracts X X X X X X X X Extracts X X X X ..... t on the land owned by GMADA, the commercial decision taken by the CoC to make a provision in the Resolution Plan with respect to the Statutory Dues owed to GMADA, cannot be faulted with, though GMADA has failed to make the requisite claim, as provided for under the Code, but has been in communication with the RP - We do not appreciate the act of GMADA not having filed their claim, the fact remains that the Real Estate Project is being constructed on GMADA land and all approvals, permits and licences involves GMADA, which is a Secured Creditor . Further, the nature of business and the ground realities were kept in mind by the CoC before taking a commercial decision. In approval of the Resolution Plan, the CoC takes a business decision based on ground realities, by a majority which binds all stakeholders including dissenting Creditors . Keeping in view the peculiar facts of the instant case that the Resolution Plan was approved by the CoC way back in 2019 and the Adjudicating Authority has approved the Plan on 01.06.2021 after a period of two years and the Plan has already been implemented, we do not see it a fit case to set the clock back, specifically keeping in view the ratio of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Debtor'; Company Appeal (AT) Insolvency No. 564/2021 is filed by 16 Appellants who are a group of Allottees of the Project IREO Hub; Company Appeal (AT) Insolvency No. 644/2021 is preferred by M/s. Akila Constructions Private Limited and M/s. S. Sony & Co. Pvt Ltd, who are the 'Operational Creditors' of the 'Corporate Debtor'; Company Appeal (AT) Insolvency No. 645/2021 is filed by M/s. Larsen & Toubro Limited ('L&T Ltd'); Company Appeal (AT) Insolvency No. 804/2021 is preferred by Greater Mohali Area Development Authority, ('GMADA') and Company Appeal (AT) Insolvency No.269/2022 is preferred by 6 Appellants who are Allottees, challenging the same Impugned Order dated 01.06.2021 passed by the Learned Adjudicating Authority (National Company Law Tribunal, New Delhi Principal Bench) in CA 2083(PB)/2019 in (IB) 934(PB)/2018, whereby the Learned Adjudicating Authority has approved the Resolution Plan. Since all these Appeals are arising out of a common Impugned Order, they are being disposed of by this common Order. 2. By the Impugned Order dated 01.06.2021, the Learned Adjudicating Authority, while exercising its power under Section 31 of the Insolvency and Bankruptcy Code, 2016, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20, raising objections to the Plan on the ground that it was non-compliant to Section 30 (2) of the Code as it is only providing 25% of the admitted claim amount, whereas GMDA was not even considered as a Creditor of the 'Corporate Debtor' under Sections 5(20) & 5(21) read with Sections 3(11) & 3(21) of the Code, today is being provided with 100% of the amount appearing in the Books of the 'Corporate Debtor'. • Learned Counsel submitted that the Appellants raised several objections against the Resolution Plan, as approved by the CoC, being discriminatory towards 'Operational Creditors', but I.A.1208/2020 & I.A.3824/2020 filed by them was never decided. Though the Adjudicating Authority had reserved I.A.1208/2020 and I.A.3824/2020 for Orders on 19.01.2021, the same was not pronounced till 30.05.2021. On 31.05.2021 since the Learned Judicial Member was superannuating, the matter was opened for re-hearing, but on 01.06.2021, the newly appointed Hon'ble Acting President went ahead and heard I.A.2083/2019, without hearing the Application I.A.1208/2020 & I.A.3824/2020 where Orders were already reserved. Further, on 14.06.2021, the Impugned Order was suddenly uploaded on the website ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities have also been discriminated as the Resolution Plan provides for only 25% due amount to Income Tax Authorities, whereas GMDA was provided with 100%. • Learned Counsel placed reliance on the Judgements of this Tribunal in 'M/s. Ergomaxx (India) Pvt. Ltd.' Vs. 'The Registrar of NCLT Bengaluru & Ors.' Comp. App. (AT) (CH) (ins.) No. 133/2021, in support of his contention that any Order passed by the Learned Adjudicating Authority in violation of the NCLT Rules, 2016, would be considered as a nullity. Learned Counsel also placed reliance on the Judgement of the Hon'ble Supreme Court in 'Ghanshyam Mishra & Sons Pvt. Ltd.' Vs. 'Edelweiss Asset Reconstruction Company Limited & Ors.' (2021) 9 SCC 657 in support of his argument that the Adjudicating Authority was wrong in observing that even after approval of the Resolution Plan under Section 31(1) of the Code, the Application of the Appellants can be decided by the Adjudicating Authority. Company Appeal (AT) (Insolvency) No.564/2021: • Learned Counsel for the Appellant submitted that the Appellants have filed Application CA - 2866(PB)/2019, raising objections to the approval of the Resolution Plan and the Adjudicating Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w Allottees. Both Valuation Reports valued units at Rs.30,000 per square yard to Rs.38,000 per square yard, in spite of this, the Resolution Plan cancelling the current Builder Buyer Agreement ('BBA') set almost double base rates without providing proper amenities. All new allotments valued the units at Rs.35,000 per square yard to Rs.38,000 per square yard to double the base rate be set in the Resolution Plan for the same class of 'Financial Creditors'. • Clause 18.3 of the Resolution Plan states that 'Dissenting Financial Creditors' will be treated at par with the 'Assenting Financial Creditors' and shall be paid at par with them. Clause 18.4 is in contradiction to Clause 18.3 in so far as it pertains to payment terms of the dissenting IREO Hub Allottees. It is submitted that apart from other irregularities in the Resolution Plan with respect to IREO Hub Allottees, the RP did not circulate the Resolution Plan to Members of the CoC but sent an email to the CoC dated 28.08.2019 requiring the Allottees that if anyone of them wants the copy of the Plan, they need to submit a confidential undertaking. Without submitting the Plan to the CoC Members, he has requested the Members t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approval of the Resolution Plan during pendency of their Applications, seeking for admission of the remainder claim amount of Rs.12,95,88,891/- in CA3457(PB)/2020. It is submitted that in para 12 of the Impugned Order dated 01.06.2011, it is observed that approval of the Resolution Plan is without prejudice to the rights of the Appellant whose Applications are pending. The entire scheme of the Code would be rendered meaningless if a Resolution Plan is allowed without even considering the objections. It is submitted that in this case Orders were reserved on 15.02.2021 and 19.01.2021 and instead of deciding these Applications, the Adjudicating Authority went ahead and confirmed the Resolution Plan. This is contrary to the law settled by the Hon'ble Supreme Court in 'Ghanshyam Mishra & Sons Pvt. Ltd.' (Supra). • The Resolution Plan has created a classification among the same class of 'Operational Creditors' discriminating between them which is also in violation of the Judgement of this Tribunal in 'Sushil Ansal' Vs. 'Ashok Tripathi & Ors.' Comp. App. (AT) (Ins.) 452/2020, and therefore the Impugned Order passed by the Adjudicating Authority is erroneous. Company Appeal (AT) (I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings related thereto shall stand terminated. Since the subject matter of the Petition are the proceedings, which relate to the 'Claims' of the Respondent, prior to the approval of the Plan, in the light of the view taken by us, the same cannot be continued equally, the claims, which are not part of the Resolution Plan, shall extinguished'. • It is submitted that the Impugned Order is in contradiction to what was laid down by the Hon'ble Supreme Court in 'Ghanshyam Mishra & Sons Pvt. Ltd.' (Supra). 4. Submissions of the Learned Counsel appearing on behalf of the erstwhile Resolution Professional and Chairman Monitoring Committee: Company Appeal (AT) (Insolvency) No.554/2021: • It is submitted that the CoC Members approved the Resolution Plan by 100% voting majority on 05.09.2019 and the Adjudicating Authority has approved the Resolution Plan under Section 31 of the Code on 01.06.2021. • The Appellants had approached the Hon'ble High Court of Delhi by way of a Writ Petition titled 'Paramvir Singh Tiwana' Vs. 'Union of India & Ors.' WP (C) 6377/2021, on the same grounds as enumerated in the present Appeal, whereby the Hon'ble High Court of Delhi while dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequently dismissed vide Order dated 13.02.2020. I.A.4109/2020 was preferred praying for rejection of the Resolution Plan on the ground that it was contrary to the provisions of the Code. • It is submitted that the Code does not provide for adjudication of contractual issue, thus changing any booking amount or Layout Plan could not have been directed by the Adjudicating Authority. The Resolution Plan has been approved by 100% voting majority in accordance with Section 25A(3A) of the Code. • It is submitted that multiple meetings were convened to address the grievance of the rights of IREO Hub and it was only after discussions that the Resolution Plan was put to vote. The units between the years 2011 to 2014 were sold when the Real Estate Market were in a boom whereas the remaining units were sold three months prior to the initiation of CIRP when the Real Estate Market was facing downfall. Allottees to home allotments were made between the years 2011 to 2014, have been offered a compensation in the Resolution Plan ranging from 22% to 38% on the sale price on account of change in the Layout Plan. The Appellants form part of the 'Financial Creditors' whose vote has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. After the initiation of CIRP, the RP had requested the first Appellant to handover the keys of the Flats, but they have failed to cooperate. The second Appellant had initially filed a claim as an 'Operational Creditor' on 19.10.2018, despite having been allotted three Flats amounting to Rs.1.77Crs./-. Thereafter he filed a revised claim on 03.12.2019, after the approval of the Resolution Plan by the CoC, as a 'Financial Creditor' in a class of Creditors. • In the instant case, GMADA is a Statutory Authority and a certain portion of land being hypothecated by the 'Corporate Debtor' in favour of GMADA, thus making it a Secured Creditor. CoC can approve a differential distribution of funds to a certain class of Creditors which may result in a consequent deduction of amounts payable to other 'Financial and Operational Creditors'. There are no preferential irregularities in the CIRP. Company Appeal (AT) (Insolvency) No.645/2021: • It is submitted that CA627/2020 was preferred by the Appellants seeking directions against the RP to pass a recent Order regarding the verification of outstanding claim amounting to Rs.12,95,88,891/-. Vide Order dated 13.02.2020, the Adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has an overriding effect with other statutes and once the provisions of the Resolution Plan is approved by the CoC, it binds all stakeholders including the Government Authorities such as the Appellants. The Commercial Wisdom of the CoC is not justiciable and the amount provided for the GMADA is as per the Books of the Account of the 'Corporate Debtor' though they did not choose to prefer any 'Claim'. Company Appeal (AT) (Insolvency) No.269/2022: • It is submitted that the Resolution Plan was approved by 100% voting majority and this Appeal has been preferred by a group of 6 'Financial Creditors' in a class i.e., Real Estate Allottees. It is argued that the first and second Appellant have not filed their claims with the RP till the approval of the Resolution Plan by the Adjudicating Authority and in fact had filed their claims with the SRA only after the approval of the Resolution Plan. It is settled position of law that while approving the Resolution Plan, the jurisdiction of the Adjudicating Authority is only limited to ensure compliance of Section 30 of the Code. The grievances raised by the Appellants pertains to the commercial aspect of the Plans and as such the CoC woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e holder at a RERA decree in their favour in the cited matter and had given up their status as a Homebuyer, whereas, in the present case, such an issue did not arise. • It is submitted that an upfront payment of Rs.25Crs./- was made by the SRA towards the unpaid CIRP Cost and towards amounts payable to 'Operational and Financial Creditors' against settlement of admitted claims. Additional amount of Rs.10.75Crs./- has been infused towards the construction cost in the interest of 700 Homebuyers. It is submitted that 167 Conveyance Deeds have been executed and 230 BBAs with different Homebuyers. Learned Counsel relied on the ratio of the Hon'ble Supreme Court in 'Pratap Technocrat Private Limited' (Supra), wherein the Hon'ble Apex Court has upheld the observation of the Adjudicating Authority that pending Applications will not come in the way of the approval of the Resolution Plan. 6. Submissions of the Learned Sr. Counsel appearing on behalf of the Axis Finance Ltd.: • M/s. Axis Finance Ltd has been impleaded as Respondents vide Orders passed by this Tribunal on 22.10.2021 in I.A.1779/2021. Learned Sr. Counsel, Mr. Ganda submitted that the Appellants have been raising fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e received by the RP. On 08.06.2019, the list of legible Prospective Resolution Applicants was issued and the 9th CoC Meeting was convened on 23.08.2019, when the Resolution Plan was placed before the CoC. On 05.09.2019, the CoC Members approved the Resolution Plan by 100% voting majority. On 01.06.2021, the Adjudicating Authority approved the Resolution Plan under Section 31 of the Code. 9. Learned Counsel filed his Additional Written Submissions stating that the Impugned Order was uploaded only on 15.06.2021 when the Adjudicating Authority had Summer Vacations from 12.06.2021 and that the Hon'ble Acting President was appointed only on 31.05.2021 and 01.06.2021 and could not have possibly prepared the Order in a single day. The material on record evidences that the 'status of the Cause List' was uploaded on the NCLT website on 01.06.2021, indicating the approval of the 'Resolution Plan' the Hon'ble Acting President was conducting the proceedings virtually from Bangalore and the Technical Member from New Delhi and therefore the pronouncement was made virtually and status of the Cause List was uploaded on the website on the very same day. The contention of the Learned Counsel that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter was heard at length for an hour and that the Petitioners therein and the Appellants in Company Appeal (AT) (Insolvency) No.554/2021 here have sought to withdraw the Petition with a liberty to assail the Impugned Order 'on merits' before the appropriate forum and therefore the contention of the Appellants/Paramvir Singh Tiwana that there were procedural irregularities and Principles of Natural Justice have not been followed, cannot be raised now at this appellate stage. Having first approached the Hon'ble Delhi High Court impugning the very same Order dated 01.06.2021, and on the same facts enumerated in this Appeal, and then having withdrawn with the liberty to assail the Order 'on merits', they cannot now raise the very same issue. Be that as it may, at the cost of repetition, the status of Cause List was uploaded on the website of the NCLT on the very same date i.e., on 01.06.2021 categorically stating that the Resolution Plan has been duly approved. Rule 150 of the NCLT Rules, 2016, stipulates that after hearing, the Tribunal shall make and pronounce an Order either at once or as soon as thereafter as may be practicable. In the instant case, the Order was pronounced as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on plan is statutorily structured by sub-section (1) of Section 31. The jurisdiction is limited to determining whether the requirements which are specified in sub-section (2) of Section 30 have been fulfilled. This is a jurisdiction which is statutorily-defined, recognised and conferred, and hence cannot be equated with a jurisdiction in equity, that operates independently of the provisions of the statute. The adjudicating authority as a body owing its existence to the statute, must abide by the nature and extent of its jurisdiction as defined in the statute itself." ………………………………………………………………… "47. These decisions have laid down that the jurisdiction of the adjudicating authority and the appellate authority cannot extend into entering upon merits of a business decision made by a requisite majority of the CoC in its commercial wisdom. Nor is there a residual equity based jurisdiction in the adjudicating authority or the appellate authority to interfere in this decision, so long as it is otherwise in conformi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esolution plan itself, which permits them to get back the liquidation value of their respective credit limits. Thus, on the peculiar facts of the present case, we do not wish to disturb the resolution plan leading to the on-going operation of Respondent 1." (Emphasis Supplied) 13. In this judgement, the Hon'ble Apex Court has observed that as the requisite percentage of the Voting Share has been achieved, majority of the Creditors have given their approval, and the Plan was also put into operation, and much water has flown under the bridge has categorically held that the ultimate objective of the Code is 'Maximisation of Assets in a time bound manner' is to be kept in mind. We do not find any material irregularity in contravention of the Code in the Adjudicating Authority having approved the Plan and given liberty to the Appellants to prosecute litigation, and is therefore not a reason to set aside the approval of the Resolution Plan. 14. Now we address ourselves to the issue raised by the Appellant/'Operational Creditors' in these Appeals that there is discrimination between the class of Creditors and that GMADA was paid 100% of the amount in the Books of the 'Corporate Debtor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re that resolution of distressed assets takes place and only if the same is not possible should liquidation follow." ………………………………………………………………… "88. By reading para 77 (of Swiss Ribbons [Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17] ) dehors the earlier paragraphs, the Appellate Tribunal has fallen into grave error. Para 76 clearly refers to the UNCITRAL Legislative Guide which makes it clear beyond any doubt that equitable treatment is only of similarly situated creditors. This being so, the observation in para 77 cannot be read to mean that financial and operational creditors must be paid the same amounts in any resolution plan before it can pass muster. On the contrary, para 77 itself makes it clear that there is a difference in payment of the debts of financial and operational creditors, operational creditors having to receive a minimum payment, being not less than liquidation value, which does not apply to financial creditors. The amended Regulation 38 set out in para 77 again does not lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Company involved in construction of Housing and Commercial Units and the land on which the construction is to be completed belongs to GMADA. As the nature of the activity of the 'Corporate Debtor' is dependent on the land owned by GMADA, the commercial decision taken by the CoC to make a provision in the Resolution Plan with respect to the Statutory Dues owed to GMADA, cannot be faulted with, though GMADA has failed to make the requisite claim, as provided for under the Code, but has been in communication with the RP. Though we do not appreciate the act of GMADA not having filed their claim, the fact remains that the 'Real Estate Project' is being constructed on GMADA land and all approvals, permits and licences involves GMADA, which is a 'Secured Creditor'. Further, the nature of business and the ground realities were kept in mind by the CoC before taking a commercial decision. In approval of the Resolution Plan, the CoC takes a business decision 'based on ground realities, by a majority which binds all stakeholders including dissenting Creditors'. 17. As regarding the grievances of the Homebuyers who are arrayed as 'Financial Creditors', it is relevant to see the voting perc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity has approved the Resolution Plan in violation of Section 30(2) of the Code and this is in contravention of the ratio laid down by the Hon'ble Supreme Court in 'State Tax Officer (1)' Vs. 'Rainbow Papers Limited' Civil Appeal no. 1661/2020, wherein the Hon'ble Apex Court has held that the word 'May' arising in Section 31(1) of the Code would read as 'Shall' while construing Section 31(1) of the Code. The facts of 'State Tax Officer (1) (Supra), is distinguishable in the sense that dues therein pertain to Statutory Dues and the state being a 'Secured Creditor' under the GVAT Act, should be paid its dues. It was observed that the definition of the Secured Creditor in the Code does not exclude any Government or Governmental Authorities. The issue in the instant Company Appeal (AT) (Insolvency) No. 554/2021 is not related to 'Statutory Dues' or 'Security Interest' moreover we have observed that if there is any differential treatment in the 'Operational Creditors' dues (100% paid to GMADA/ a Secured Creditor) is solely based on the commercial decision of the CoC and any differential treatment between the class of Creditors, based on the nature of business involved, cannot be construe ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
