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TMI Blog2024 (5) TMI 421X X X X Extracts X X X X X X X X Extracts X X X X ..... I B Code, 2016 - Resolution Plans have been submitted by the Home Buyers or not - approval of Resolution Plan by Committee of Creditors - HELD THAT:- In accordance with the principle, laid down by the Judgment of the Principal Bench of NCLAT in [ 2022 (1) TMI 166 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ], the `Tribunal , was conscious of the fact that in those case too, it was contended that no Resolution Plan was received and the Committee of Creditors, had declined the request of the Resolution Professional to undertake the Projectwise Resolution Process, but, ultimately, based upon the finding recorded as above and particularly from the perspective of the interest of the Stakeholders. Owing to the aforesaid and particularly looking to the vital interest of the Home Buyers, the respective `Company Appeals , would stand `Allowed - The Impugned Order / Judgment dated 26.04.2023, in each of the Company Appeals are hereby quashed - The appeal as preferred iis hereby allowed, consequently further extension for a period of 90 days as prayed for, in the aforesaid Application, is granted to the Resolution Professional, to complete the Insolvency Proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellant that being allured by the Advertisement, that the 12 Home Buyers, had entered into Sale and Construction Agreement with the Corporate Debtor, for the purchase of apartment, along with the undivided share to an extent of 18.856 cents of land in Survey No.333/1-1 and 333/2-1 at Vattappara Village of Sharon Hills Phase I Project at Thiruvananthapuram. 6. It was further contended by the Home Buyers that by February 2015, they have paid the entire sale consideration, towards their respective residential apartments, proposed to be purchased by them and the undivided share over the land of the Corporate Debtor. 7. It is the case of the Appellant that in pursuance to the aforesaid transaction, the Corporate Debtor, had handed over the possession of the residential apartment and ever since then, the respective Home Buyers, are in exclusive possession and enjoyment of the respective apartments, for the past more than 7 years. 8. However, with an ulterior motive, the Corporate Debtor, had failed to execute the Registered Sale Deed, within the agreed time, with regard to the residential apartment and the undivided share over the land as promised, within the time period, as referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Debtor to the tune of 30.28%. 13. Ultimately, at a later stage, the Home Buyers of Sharon Hills Project at Thiruvananthapuram, had get themselves registered as a Society under the Travancore-Cochin Literary Scientific and Cultural Societies Registration Act of 1955, and upon the Registration and acquiring the status being a Registered Society, who have the right to sue and be sued, had submitted a Resolution Plan as per Section 30 of the Insolvency and Bankruptcy Code, in order to take over the dues of Home Buyers of the Sharon Hills Phase 1 Project of the Corporate Debtor. 14. The Committee of Creditors who have been appointed an Expression of Interest was called for and the Provisional List of Prospective Resolution Applicants of Claim, submitted a Resolution Plan, according to the provisions of the I B Code, 2016, but, it is contended that the Resolution Professional, without considering any of the legal and factual aspects and submissions, had rejected the Resolution Plan which was submitted by the Appellant. 15. The controversy stood germinated from this stage, that the Resolution Professional thus appointed, inspite of the strict timeline, prescribed under Section 12 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Sale and Construction Agreement with the Corporate Debtor, who too are agitating the similar issue, as against the Impugned Order, whereby, the Application preferred under Section 12, in the light of the provisions contained under Section 60(5) for extension of time period for completion of the Insolvency Resolution Process has been rejected, almost on an identical ground. Comp. App (AT) (CH) (INS) No. 215 / 2023 : 21. In Comp. App (AT) (CH) (INS) No. 215 / 2023, it has been preferred by M/s. Orchid Valley Apartment Buyers Association, by putting a challenge to the Impugned Order, dated 26.04.2023, as it was passed in IA (IBC)/157/KOB/2023 in CP(IBC)/5/KOB/2021, by the NCLT, Kochi Bench. 22. It was the Association of the Home Buyers in this instant Appeal have primarily laid the foundation of the case, also based on almost the similar facts except for that the Respondent for the advertisement of 01.03.2015, was published for the purposes of purchase of the construction of the Home Apartments, made by the Corporate Debtor, which was responded by the 25 Home Buyers who had too entered into a Sale and Construction Agreement with the Corporate Debtor for the purchase of the respectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26.04.2023, has ordered for Liquidation of the Corporate Debtor for the aforesaid four Projects, because of which it had invited the Resolution Plan to be submitted, before the Resolution Professional. Invariably, it has been a consistent case of the Appellants in this Appeal, that they have submitted their respective Resolution Plan, which was placed before the Committee of Creditors for its approval, but, owing to the fact that certain errors have crept in, which though were curable, the Resolution Professional for the reasons has not accepted their respective Resolution Plan, without assigning any logical reason, and had even not provided an opportunity to the Appellants to cure the defects as allegedly observed by the Resolution Professional. Consequently, the Resolution Plan was rejected. But however, some of the Resolution Plan which were not supplied with any defect proceeded and were placed before the Committee of Creditors for its approval. 29. It is contended by the Appellants that every apartment of the Home Buyers in each of these Appeals which is the subject matter of the `CIRP Proceedings was Stock in Trade , in the Real Estate business of the Corporate Debtor and sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BC) / 475 / KOB / 2022. 32. Further an extension was sought for, by the Resolution Professional and yet again a 60 days extension for the period from 15.02.2023 to 16.04.2023, which too was granted by an Order of the Adjudicating Authority, dated 15.02.2023 as it was passed in IA No. 67 / KOB / 2023, it has been observed in the Impugned Order, which was not challenged at any stage that its after the grant of the aforesaid extensions that IA (IBC) / 157 / KOB / 2023, has been filed, seeking an extension of further time to complete the Insolvency Resolution Process, which happens to be incontravention to the spirit of the provisions, contained under 1st Proviso to sub section 3 of Section 12 of the Act and for the logic assigned therein was that since the extension has been earlier granted twice, now the same cannot be extended recurringly at the whims and fancies of the Resolution Professional. Because, after the Order of passing the CIRP Proceedings of the Corporate Debtor, more than 5 years and 5 months have already elapsed. 33. It also reveals from the facts that the Interim Resolution Professional, was appointed by the NCLT, Kochi Bench in the respective Company Petitions, and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Creditor on the basis of the decision of the Board for considering the complexities of the various Projects, had resulted into delaying the process of culmination of the Resolution Proceedings and thus he had contended that on account of the fact that major time period has lapsed, because of the discussions being held between the Home Buyers Association and the Landlords, as they were permitted by the Hon ble Tribunal, in view of the said fact the Application submitted to exclude causing delay, the Project Plans which are under the JDA and further to exclude the time period as engaged by the secured Financial Creditors, who have sought time for taking further decisions qua the furtherance of the Plan for the purposes of invoking an extension of time the Resolution Professional submitted that despite of the provisions, contained under Sec. 12, there is no legal impediment as such, for the Tribunal to exercise its power under Rule 11 for the purposes of extension of the time period for the reason as explained in the Application in IAs filed on 15.04.2023. The reason attributable to the delay since was beyond the control of the Resolution Professional and thus he has submitted that o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been granted, the same cannot be extended for further period, though Law do not specifically create any legal embargo or a bar, that in order to meet out the ends of Justice to consider the Resolution Plan and for an appropriate and just adjudication, the extension cannot be granted, in appropriate cases, because Law has to be flexibly interpreted to do justice and not to deprive it merely of the time restrictions, under the Procedural Law. 44. He further submits that the Adjudicating Authority while exercising their inherent powers, it can be invoked and the period for completion of Insolvency Resolution Process in an appropriate cases could be extended, owing to the aforesaid logic reason as observed by us as above. 45. The Learned Counsel for the Appellant has relied upon the Judgment as it was discussed by the Learned Adjudicating Authority in the Impugned Judgment of Committee of Creditors of Essar Steel (India) Ltd. v. Satish Kumar Gupta Ors. as reported in (2020), 8 SCC 531. The basic principle and foundation as laid down by the Hon ble Apex Court, by analysis of the said Authority, on the issue of the aspect for extension of time period beyond 330 days, for extension of ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for completion of the insolvency resolution process beyond 330 days, and that it would be in the interest of all stakeholders that the corporate debtor be put back on its feet instead of being sent into liquidation and that the time taken in legal proceedings is largely due to factors owing to which the fault cannot be ascribed to the litigants before the Adjudicating Authority and/or Appellate Tribunal, the delay or a large part thereof being attributable to the tardy process of the Adjudicating Authority and/or the Appellate Tribunal itself, it may be open in such cases for the Adjudicating Authority and/or Appellate 132 Tribunal to extend time beyond 330 days. Likewise, even under the newly added proviso to Section 12, if by reason of all the aforesaid factors the grace period of 90 days from the date of commencement of the Amending Act of 2019 is exceeded, there again a discretion can be exercised by the Adjudicating Authority and/or Appellate Tribunal to further extend time keeping the aforesaid parameters in mind. It is only in such exceptional cases that time can be extended, the general rule being that 330 days is the outer limit within which resolution of the stressed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Both these judgments in Atma Ram Mittal [Atma Ram Mittal v. Ishwar Singh Punia, (1988) 4 SCC 284] and Sarah Mathew [Sarah Mathew v. Institute of Cardio Vascular Diseases, (2014) 2 SCC 62 : (2014) 1 SCC (Cri) 721] have been followed in Neeraj Kumar Sainy v. State of U.P. [Neeraj Kumar Sainy v. State of U.P., (2017) 14 SCC 136 : 8 SCEC 454] , SCC paras 29 and 32. Given the fact that the time taken in legal proceedings cannot possibly harm a litigant if the Tribunal itself cannot take up the litigant's case within the requisite period for no fault of the litigant, a provision which mandatorily requires the CIRP to end by a certain date without any exception thereto may well be an excessive interference with a litigant's fundamental right to nonarbitrary treatment under Article 14 and an excessive, arbitrary and therefore unreasonable restriction on a litigant's fundamental right to carry on business under Article 19(1)(g) of the Constitution of India. This being the case, we would ordinarily have struck down the provision in its entirety. However, that would then throw the baby out with the bath water, in as much as the time taken in legal proceedings is certainly an impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Debtor will be back on its foot instead of being sent into liquidation. It was further held that time taken in legal proceedings is largely due to factors owing to which the fault cannot be ascribed to the litigants before the Adjudicating Authority/ Appellate Tribunal. In the present case, it s the case of Appellant (Company Appeal (AT) (Insolvency) No. 896 of 2021) that I.A. No.827 of 2021 was filed praying that Tribunal may direct the Respondent to form a special Resolution Plan for the Whispering Towers Project by seeking Resolution Applicants specifically for the said Project and create Special Purpose Vehicle for completion of the said Project to enable the members of his Intervener Association to get possession of their homes, which Application remained pending. 20. The Hon ble Supreme Court time and again reminded that the object of IBC is to resolve the insolvency resolution process and liquidation is to be adopted as a last resort. 49. In accordance with the aforesaid principle, laid down by the Judgment of the Principal Bench of NCLAT, the `Tribunal , was conscious of the fact that in those case too, it was contended that no Resolution Plan was received and the Committ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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